EXHIBIT 10.30
ASSET SALE AGREEMENT
This Asset Sale Agreement (the "Agreement") is made and entered into as of
the 11th day of October, 2004 (the "Effective Date") by and among Xxxxx
MetroWest Healthcare System, Limited Partnership, a Massachusetts limited
partnership ("Xxxxx XX"), Saint Xxxxxxx Hospital, L.L.C., a Massachusetts
limited liability company ("SVH") and OHM Services, Inc., a Massachusetts
nonprofit corporation ("OHM") (Xxxxx XX, SVH and OHM are collectively referred
to herein as "Seller") and VHS Acquisition Subsidiary Number 7, Inc., a Delaware
corporation ("Purchaser").
R E C I T A L S:
A. Seller (I) engages in the business of delivering acute care services
to the public through the acute care hospitals identified on Schedule A-1 (the
"Acute Care Hospitals"), (II) owns and operates certain medical office buildings
incident to the operation of the Acute Care Hospitals as specifically identified
on Schedule A-2 (the "MOBs"), and (III) owns and operates other healthcare
businesses incident to the operation of the Acute Care Hospitals as specifically
identified on Schedule A-3 (the "Other Businesses") (the Acute Care Hospitals,
MOBs and the Other Businesses are referred to in this Agreement collectively as
the "Hospitals").
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser, substantially all of the assets with respect to the operation
of the Hospitals, for the consideration and upon the terms and conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants contained in this Agreement, and for their mutual
reliance, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS; SALE AND TRANSFER OF ASSETS;
CONSIDERATION; CLOSING
1.1 Definitions. The terms listed below are defined elsewhere in this
Agreement and, for ease of reference, the section containing the definition of
each such term is set forth opposite such term.
TERM SECTION
---- -------
Accounts Receivable......................... Section 1.10(1)
Acute Care Hospitals........................ Recitals
affiliate................................... Section 4.6(b)
Agency Settlements.......................... Section 11.2(a)
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Aggregate Amount............................ Section 10.2.2(a)(ix)
Aggregate Damage............................ Section 1.14(a)
Agreement................................... Preamble
Annual Financials........................... Section 2.10
Assets...................................... Section 1.9
Assumed Capital Lease Obligations........... Section 1.2
Assumed Obligations......................... Section 1.11
Audit Periods............................... Section 2.8(d)
Audited Statements.......................... Section 12.12
Bills of Sale............................... Section 1.6.1
Business Services Agreement................. Section 1.6.11
Cash Purchase Price......................... Section 1.2
Casualty Termination Notice................. Section 1.14(a)
CEOs........................................ Section 2.10
CFOs........................................ Section 2.10
Claim Notice................................ Section 10.4(a)
Closing..................................... Section 1.5
Closing Date................................ Section 1.5
Closing of Financials....................... Section 9.4
CNOs........................................ Section 2.10
COBRA Coverage.............................. Section 5.3(d)
Code........................................ Section 2.12(b)
Competing Business.......................... Section 4.13
Confidential Information.................... Section 5.6
Confidentiality Agreement................... Section 5.6
Consequential Damages....................... Section 10.2.2(a)(viii)
Consultant.................................. Section 4.12
Contract and Lease Consents................. Section 2.4(c)
Contracts................................... Section 1.9(f)
control..................................... Section 4.6(b)
COOs........................................ Section 2.10
Damages..................................... Section 10.2.1
Decision Date............................... Section 1.14(c)
Disapproved Schedules....................... Section 12.5
Disclosure Schedule......................... Section 2
Document Retention Period................... Section 9.2(a)
DOJ......................................... Section 4.11
Effective Date.............................. Preamble
Effective Time.............................. Section 1.5
Employee on Disability...................... Section 5.3(a)
Employee Settle-Up Payments................. Section 9.8
Environmental Laws.......................... Section 2.6(c)
Environmental Permits....................... Section 2.6(b)
Environmental Survey........................ Section 4.12
ERISA....................................... Section 2.10
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ERISA Affiliate............................. Section 2.12(g)
Escrow Agent................................ Section 1.6.15
Escrow Amount............................... Section 1.6.15
Estimated Payment Amount.................... Section 9.8
Exchange Act................................ Section 4.5(b)
Excluded Assets............................. Section 1.10
Excluded Liabilities........................ Section 1.12
Excluded Multi-Facility Contracts........... Section 1.9(f)
Fallon Purchase Agreement................... Section 2.5
Final Balance Sheets........................ Section 1.4
Financial Statements........................ Section 2.10
FMLA........................................ Section 5.3(a)
FTC......................................... Section 4.11
GAAP........................................ Section 1.2
Governmental Authorizations................. Section 4.4
Governmental Entities....................... Section 4.4
Governmental Program Transition Patients.... Section 11.3(a)
Group Purchasing Contract................... Section 1.6.14
Hazardous Substances........................ Section 2.6(c)
Hired Employees............................. Section 5.3(a)
Hospitals................................... Recitals
Hospitals' Employees........................ Section 5.3(a)
HSR Act..................................... Section 4.11
IBEW, Local 103............................. Section 5.3(i)
Indemnified Party........................... Section 10.4
Indemnifying Party.......................... Section 10.4(a)
Indemnity Escrow Agreement.................. Section 1.6.15
Indemnity Notice............................ Section 10.4(b)
Independent Auditor......................... Section 1.4
Independent Consultant...................... Section 1.14(a)
Independent Consultant Process Notice....... Section 1.14(c)
Interim Balance Sheets...................... Section 1.2
Interim Financials.......................... Section 2.10
Inventory................................... Section 1.9(h)
IUOE Local 877.............................. Section 5.3(i)
JCAHO....................................... Section 2.8(b)
Leadership Team............................. Section 4.3(b)
Leased Real Property........................ Section 1.9(b)
Leasehold Title Policy...................... Section 4.8
Leases...................................... Section 1.9(e)
Licenses.................................... Section 1.9(d)
Liens....................................... Section 1.9
Litigation.................................. Section 1.12(c)
Local 1445.................................. Section 5.3(g)
Material Contracts.......................... Section 2.4(b)
Material Leases............................. Section 2.4(a)
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MNA......................................... Section 5.3(f)
MOBs........................................ Recitals
Monthly Financials.......................... Section 2.10
Multi-Facility Contracts.................... Section 1.9(f)
MW Natick................................... Section 5.3(h)
Net Working Capital......................... Section 1.2
Non-Useable Inventory....................... Section 1.3
Notice Period............................... Section 10.4(a)
OHM......................................... Preamble
Offset Amounts.............................. Section 11.2(d)
Other Financial Statements.................. Section 4.5(b)
Other Businesses............................ Recitals
Owned Real Property......................... Section 1.9(a)
Owners' Title Policy........................ Section 4.8
Permitted Exceptions........................ Section 7.7
Person...................................... Section 4.6(b)
Personal Property........................... Section 1.9(c)
Post-Closing Adjustment Date................ Section 1.4
Post-Closing Payments....................... Section 4.16
Powers of Attorney.......................... Section 1.6.13
Prepaids.................................... Section 1.9(g)
Purchase Price.............................. Section 1.2
Purchaser................................... Preamble
Purchaser Group............................. Section 10.2.1
Real Estate Assignments..................... Section 1.6.2
Real Property............................... Section 1.9(b)
Receivable Records.......................... Section 1.10(m)
Relevant Claim.............................. Section 10.2.2(a)(ix)
Retained Management Employees............... Section 5.3(a)
SEIU Local 285.............................. Section 5.3(j)
Seller...................................... Preamble
Seller Aggregate Amount..................... Section 10.3.2(a)(vi)
Seller Business Service Area................ Section 4.13
Seller Cost Reports......................... Section 11.2(a)
Seller Group................................ Section 10.3.1
Seller Plans................................ Section 2.12(a)
Seller Relevant Claim....................... Section 10.3.2(a)(vi)
Seller Tax Claims........................... Section 10.2.1(e)
Sick Pay Amount............................. Section 1.2
Submittal Date.............................. Section 1.14(c)
Superseded Agreements....................... Section 12.14
Surveys..................................... Section 4.8
SVH......................................... Preamble
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Tax......................................... Section 2.16
Taxes....................................... Section 2.16
Tax Return.................................. Section 2.16
Xxxxx Affiliate Contracts................... Section 1.9(f)
Xxxxx XX.................................... Preamble
Termination Date............................ Section 8.1(g)
THC......................................... Section 1.6.8
THC Guaranty................................ Section 1.6.8
Third Party Claim........................... Section 10.4(a)
Title Commitment............................ Section 4.8
Title Company............................... Section 4.8
Title Instruments........................... Section 4.8
Title Policy................................ Section 4.8
Transferred Transition Patients............. Section 11.3(c)
Transition Patients......................... Section 11.3
Transition Services......................... Section 11.3
Transitional Services Agreements............ Section 1.6.10
Unaudited Financials........................ Section 2.10
Usage Percentage............................ Section 1.2
Vanguard.................................... Section 4.6(b)
Vanguard Guaranty........................... Section 12.18
WARN........................................ Section 1.11(d)
1.2 Purchase Price. Subject to the terms and conditions of this
Agreement, the aggregate purchase price to be paid by Purchaser to Seller for
the purchase of the Assets shall be One Hundred Million Three Hundred Thousand
Dollars ($100,300,000) (the "Purchase Price"), plus or minus (a) the amount of
Net Working Capital (as defined below) on the Closing Date, minus (b) the amount
of Seller's capital lease obligations with respect to the Hospitals on the
Closing Date, if any, that are assumed by Purchaser pursuant to Section 1.11 of
this Agreement (the "Assumed Capital Lease Obligations"), minus (c) the product
of the Usage Percentage and the Sick Pay Amount on the Closing Date (the sum of
(a), (b) and (c) being referred to for purposes of this Agreement as the "Cash
Purchase Price"). The payment of the Cash Purchase Price at Closing shall be
governed by Section 1.7.
For purposes of this Agreement, "Net Working Capital," as of any date,
shall be defined as an amount equal to the difference between the (i) current
assets of Seller with respect to the operation of the Hospitals, which for
purposes of this calculation shall include only (A) the value of the Prepaids,
(B) the value of the Inventory and (C) other current assets associated with the
Hospitals to the extent they have value and are reflected on the Financial
Statements, and (ii) the current liabilities of Seller which are payable to
third parties with respect to the operation of the Hospitals, which for purposes
of this calculation shall only include (A) Accounts Payable (excluding credit
balances of patient accounts receivable to the extent included therein), but
only to the extent it is anticipated that Purchaser will be required to fund the
payment of such Accounts Payable after the Effective Time (for example, if
Seller has keyed in, or expects to key in as of the Closing, certain portions of
the Accounts Payable for payment by Seller after the Closing, such portion of
the Accounts Payable would not be included in the calculation of Net Working
Capital), (B) Accrued Expenses, (C) Accrued Payroll, (D) Accrued Paid Time Off
and
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(E) Other Current Liabilities (as such terms are utilized on the Interim Balance
Sheets and the Final Balance Sheets). For purposes of this Agreement, "Usage
Percentage" shall be defined as the percentage set forth on Schedule 1.2-a. For
purposes of this Agreement, "Sick Pay Amount" shall be defined as the amount of
extended sick pay (Reserve Sick) obligations of Seller and/or its affiliates to
the Hired Employees.
At least seven (7) calendar days but no more than fifteen (15) calendar
days prior to the Closing Date, Seller shall prepare and deliver to Purchaser
the latest available unaudited balance sheets of Seller (as of the end of a
calendar month) with respect to the operation of the Hospitals (the "Interim
Balance Sheets"). The Interim Balance Sheets shall (I) be prepared in conformity
with generally accepted accounting principles consistently applied ("GAAP") to
the extent described in, and qualified by, Section 2.10, (II) include a
calculation of Net Working Capital, the Assumed Capital Lease Obligations and
the Sick Pay Amount and (III) be attached hereto as Schedule 1.2-b. The amounts
set forth in the Interim Balance Sheets shall be subject to adjustment as
provided in Sections 1.3 and 1.4 below.
1.3 Inventory. Seller shall cause an inventory to be taken of the
Inventory by employees or representatives of Seller or its affiliates, with said
inventory to be taken in accordance with Seller's policies and procedures and
the policies and procedures used in connection with determining inventory for
purposes of preparing the Unaudited Financials, as near in time as possible (but
in no event more than ten days prior) to the Closing Date and with the results
extended and adjusted through the Closing Date. Seller shall permit
representatives or employees of Purchaser to observe such inventory process.
During the course of the inventory process, Purchaser shall be permitted to
designate which specific items of inventory are, using Purchaser's reasonable
discretion, not useable by Purchaser in the operation of the Hospitals after the
Effective Time (the "Non-Useable Inventory"). The cost of conducting the
inventory shall be borne by Seller. All inventory items that are not obsolete
and that are not among the Non-Useable Inventory shall be valued at the lesser
of cost or current market value. The parties acknowledge that the inventory to
be taken pursuant to this Section 1.3 will not be conducted until immediately
prior to the Closing Date and, as such, the results of such inventory will not
be available until some time after the Closing Date. Accordingly, the parties
agree that for purposes of the Interim Balance Sheets, Net Working Capital shall
include the book value of the Inventory with respect to the operation of the
Hospitals as reflected by the latest available unaudited balance sheets of
Seller. For purposes of the Final Balance Sheets, the portion of Net Working
Capital attributable to the Inventory shall be the value of the Inventory as
determined pursuant to this Section 1.3.
1.4 Post-Closing Adjustment to Purchase Price. Within one hundred twenty
(120) calendar days after the Closing Date, the final unaudited balance sheets
of the Hospitals as of the Closing Date (the "Final Balance Sheets"), which
shall include a calculation of Net Working Capital as of the Closing Date, the
Assumed Capital Lease Obligations and the Sick Pay Amount, shall be prepared by
Seller and delivered to Purchaser. Purchaser, in connection with its review of
the Final Balance Sheets, shall be permitted to review work papers of Seller or
its accountants with respect to the preparation of the Final Balance Sheets and
the books and records of Seller reasonably related thereto. The Interim Balance
Sheets and the Final Balance Sheets shall be prepared in a manner consistent
with the terms of Section 2.10. If Purchaser disputes any entry on the Final
Balance Sheets that affects the calculation of Net Working
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Capital, the Assumed Capital Lease Obligations or the Sick Pay Amount, Purchaser
shall notify Seller in writing (which writing shall contain Purchaser's
determination of the amount of the disputed entry) within forty-five (45)
calendar days after Purchaser's receipt of the Final Balance Sheets from Seller.
If Purchaser and Seller cannot resolve such dispute within thirty (30) business
days after Purchaser notifies Seller in writing of such dispute, then
PricewaterhouseCoopers, independent certified public accountants (the
"Independent Auditor"), shall review the matter in dispute and, solely as to
disputes relating to accounting issues and acting as an expert and not as an
arbitrator, shall promptly decide the proper amounts of such disputed entries
(which decision shall also include a final recalculation of the Cash Purchase
Price). In the event that all or a portion of the dispute at issue involves a
legal issue or an interpretation of this Agreement, such legal or interpretative
dispute shall first be subject to adjudication by a court or similar tribunal,
with any necessary review by the Independent Auditor under this Section 1.4
occurring following the resolution of such legal dispute. Such decision of the
Independent Auditor shall be conclusive and binding as between Purchaser and
Seller, and the costs of such review shall be borne by both Seller and Purchaser
in proportion to the relevant amount each party's determination has been
modified.
Within fifty (50) calendar days after Purchaser's receipt of the Final
Balance Sheets from Seller or, if disputed by Purchaser, within five (5)
business days after the earlier of (a) the date Purchaser and Seller finally
resolve such dispute and recalculate the Cash Purchase Price accordingly, or (b)
the date of receipt of a decision from the Independent Auditor (the
"Post-Closing Adjustment Date"), either (i) Seller shall pay Purchaser in cash
or in other immediately available funds the amount of any decrease in the Cash
Purchase Price, or (ii) Purchaser shall pay Seller in cash or in other
immediately available funds the amount of any increase in the Cash Purchase
Price.
1.5 Closing Date. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at 9:00 a.m. on December 31,
2004, at the offices of XxXxxxxxx Will & Xxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 or such other date, time and place as
the parties shall mutually agree ("Closing Date"); provided that all conditions
precedent and other matters required to be completed as of the Closing Date have
been or will be completed on such date. The Closing with respect to each
Hospital shall be deemed to have occurred and to be effective as between the
parties as of 12:01 a.m. (determined by reference to the local time zone in
which the Hospital is located) on the next day after the Closing Date (the
"Effective Time").
1.6 Items to be Delivered by Seller at Closing.
At or before the Closing, Seller shall deliver to Purchaser the
following, duly executed by Seller where appropriate:
1.6.1 General Assignment, Xxxx of Sale and Assumption of Liabilities
in the form of Exhibit 1.6.1 attached hereto (the "Bills of Sale");
1.6.2 Assignment and Assumption of Real Estate Leases in the form of
Exhibit 1.6.2 attached hereto with respect to each Leased Real Property (the
"Real Estate Assignments");
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1.6.3 Limited Warranty Deed(s) (or such other deed comparable to
limited warranty deed(s) as is applicable to the jurisdiction at issue) in the
form of Exhibit 1.6.3 attached hereto;
1.6.4 favorable original certificates of good standing, or
comparable status, of Seller, issued by (a) the respective states of
incorporation and organization of each Seller and (b) each state in which (i)
Seller is qualified to do business as a foreign corporation or other entity and
(ii) each Hospital is located, dated no earlier than a date which is seven (7)
calendar days prior to the Closing Date;
1.6.5 an opinion of Seller's or Seller's affiliates' in-house
counsel in substantially the form attached hereto as Exhibit 7.6;
1.6.6 a certificate of the President or any Vice President of each
Seller certifying to Purchaser (a) the accuracy in all material respects of the
representations and warranties set forth in Article 2 hereof, and compliance
with Seller's covenants set forth in this Agreement and (b) that all of the
conditions contained in Article 6 have been satisfied except those, if any,
waived in writing by Seller;
1.6.7 a certificate of the corporate Secretary of each Seller which
is a corporation and the corporate Secretary of the Seller-affiliated general
partner of any Seller which is a partnership and the corporate Secretary of the
Seller-affiliated member of any Seller which is a member-managed limited
liability company certifying to Purchaser (a) the incumbency of the officers of
Seller and of each such Seller-affiliated general partner and of each such
Seller-affiliated member on the Effective Date and on the Closing Date and
bearing the authentic signatures of all such officers who shall execute this
Agreement and any additional documents contemplated by this Agreement and (b)
the due adoption and text of the resolutions of the sole director of each Seller
which is a corporation, the sole director of the Seller-affiliated general
partner(s) of each Seller which is a partnership, the sole director of the
Seller-affiliated member of each Seller which is a member-managed limited
liability company and of the shareholder(s), partners, and/or members, as
applicable of each Seller authorizing (i) the transfer of the Assets and Assumed
Obligations by each Seller to Purchaser and (ii) the execution, delivery and
performance of this Agreement and all ancillary documents and instruments by
each Seller, and that such resolutions have not been amended or rescinded and
remain in full force and effect on the Closing Date;
1.6.8 Guaranty Agreement of Xxxxx Healthcare Corporation, a Nevada
corporation ("THC"), in the form of Exhibit 1.6.8 attached hereto (the "THC
Guaranty");
1.6.9 a certificate of the Secretary of THC certifying to Purchaser
(i) the incumbency of the officers of THC on the Closing Date and bearing the
authentic signatures of all such officers who shall execute the THC Guaranty and
(ii) that all necessary corporate action has been taken by THC in order to
authorize the execution, delivery and performance of the THC Guaranty;
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1.6.10 if requested by Purchaser, the Transitional Services
Agreements, which shall be substantially in the form of Exhibit 1.6.10 attached
hereto (the "Transitional Services Agreements");
1.6.11 the Business Services Agreement, which shall be in the form
of Exhibit 1.6.11 attached hereto (the "Business Services Agreement"), pursuant
to which Purchaser will xxxx Seller's accounts receivable for sixty (60) days
following the Closing Date;
1.6.12 UCC termination statements for any and all financing
statements (which do not correspond to a Permitted Exception or an agreement
which is among the Assumed Obligations) filed with respect to the Assets, the
failure of which to obtain at Closing would have a material adverse effect on
the Assets or the business of the Hospitals;
1.6.13 Limited Powers of Attorney for use of Pharmacy License, DEA
and Other Registration Numbers, and DEA Order Forms, in the form of Exhibit
1.6.13 attached hereto (the "Powers of Attorney");
1.6.14 the Group Purchasing Contract in the form of Exhibit 1.6.14
attached hereto (the "Group Purchasing Contract");
1.6.15 the Indemnity Escrow Agreement by and among Seller, Purchaser
and a financial institution acceptable to Seller and Purchaser (the "Escrow
Agent"), substantially in the form of Exhibit 1.6.15 attached hereto (the
"Indemnity Escrow Agreement"), which Escrow Agreement shall contain the
following terms: (a) the term of the Escrow Agreement shall be two (2) years
after the Closing Date, (b) the amount which Purchaser shall deposit in the
escrow at Closing shall be $7,500,000 (the "Escrow Amount"), (c) on the first
anniversary of the Closing Date, any unclaimed amount contained in the escrow
which exceeds $3,750,000 shall be distributed to Seller and (d) all costs of the
Escrow Agent in connection with the Escrow Agreement shall be borne one-half by
Seller and one-half by Purchaser;
1.6.16 evidence reasonably satisfactory to Purchaser that, as of the
consummation of the transactions contemplated by this Agreement, the Hospitals
shall no longer be subject to the terms of Seller's and/or Seller's affiliates'
nationwide settlement agreement regarding the Americans with Disabilities Act;
and
1.6.17 such other instruments, certificates, consents or other
documents which are reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.7 Items to be Delivered by Purchaser at Closing.
At or before the Closing, Purchaser shall execute and deliver or
cause to be delivered to Seller the following, duly executed by Purchaser where
appropriate:
1.7.1 payment of the Cash Purchase Price based upon the Interim
Balance Sheets (subject to adjustment as described in Section 1.4), minus the
Escrow Amount, as adjusted to reflect the prorations provided in Section 1.8 and
any adjustments to the Cash Purchase Price pursuant to Section 1.14. Such
amounts shall be payable by wire transfer of
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immediately available funds to Seller to the account(s) specified by Seller to
Purchaser in writing;
1.7.2 payment of the Escrow Amount to the Escrow Agent by wire
transfer of immediately available funds;
1.7.3 a certificate of the President or any Vice President of
Purchaser certifying to Seller (a) the accuracy in all material respects of the
representations and warranties set forth in Article 3 hereof, (b) compliance
with Purchaser's covenants set forth in this Agreement, (c) that Purchaser has
obtained all material licenses, permits, determinations of need and
authorizations from governmental agencies or governmental bodies that are
necessary or required for completion of the transactions contemplated by this
Agreement and (d) that all of the conditions contained in Article 7 have been
satisfied except those, if any, waived in writing by Purchaser;
1.7.4 a certificate of the Secretary of Purchaser certifying to
Seller (a) the incumbency of the officers of Purchaser on the Effective Date and
on the Closing Date and bearing the authentic signatures of all such officers
who shall execute this Agreement and any additional documents contemplated by
this Agreement and (b) the due adoption and text of the resolutions of the Board
of Directors of Purchaser authorizing the execution, delivery and performance of
this Agreement and all ancillary documents and instruments by Purchaser, and
that such resolutions have not been amended or rescinded and remain in full
force and effect on the Closing Date;
1.7.5 an opinion of Purchaser's in-house counsel in substantially
the form attached hereto as Exhibit 6.4;
1.7.6 favorable original certificate of good standing, or comparable
status, of Purchaser, issued by each of the Delaware and Massachusetts
Secretaries of State dated no earlier than a date which is seven (7) calendar
days prior to the Closing Date;
1.7.7 the Bills of Sale;
1.7.8 the Real Estate Assignments;
1.7.9 if requested by Purchaser, the Transitional Services
Agreements (along with the payment to Seller by wire transfer of immediately
available funds of any amounts which must be made by Purchaser to Seller or any
affiliate of Seller concurrent with the execution thereof);
1.7.10 the Business Services Agreement;
1.7.11 the Powers of Attorney;
1.7.12 the Group Purchasing Contract;
1.7.13 the Indemnity Escrow Agreement; and
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1.7.14 such other instruments, certificates, consents or other
documents which are reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.8 Prorations and Utilities. To the extent not otherwise prorated
pursuant to this Agreement, or as reflected in Net Working Capital on the
Interim Balance Sheets or the Final Balance Sheets, Purchaser and Seller shall
prorate (as of the Effective Time), if applicable, real estate and personal
property lease payments, real estate and personal property taxes, assessments
and other similar charges against real estate, plus all other income and
expenses which are normally prorated upon the sale of assets of a going concern.
As to power and utility charges, "final readings" as of the Closing Date shall
be ordered from the utilities; the cost of obtaining such "final readings," if
any, to be paid for equally by Seller and Purchaser. To the extent any amounts
described in this Section 1.8 cannot be conclusively determined as of the
Effective Time, the parties will mutually agree upon a good faith estimate
thereof based upon the then most currently available information related
thereto, and shall reflect such mutual agreement on the settlement statement
delivered in connection with Closing. Concurrent with the delivery of the Final
Balance Sheets, Seller shall deliver Purchaser a statement setting forth any
required adjustments to amounts paid at Closing with respect to the matters
described in Section 1.8, together with supporting documentation related
thereto. No later than the Post-Closing Adjustment Date, Purchaser or Seller, as
appropriate, shall pay to the other the amounts set forth therein. No provision
of this Section 1.8 shall be interpreted to negate in any way Seller's rights
under Section 1.10
1.9 Transfer of Seller Assets. On the Closing Date, Seller shall assign,
transfer, convey and deliver to Purchaser, and Purchaser shall acquire, all of
each Seller's right, title and interest in and to all of the assets owned or
used by each Seller in connection with the operation of any Hospital, other than
the Excluded Assets, including, without limitation, the following assets and
properties, free and clear of all liens, pledges, claims, charges, security
interests or other encumbrances ("Liens") other than Permitted Exceptions, such
transfer being deemed to be effective at the Effective Time (collectively, the
"Assets"):
(a) all of the real property that is owned by such Seller and used
with respect to the operation of any Hospital, including, without limitation,
the real property that is described in Schedule 1.9(a) (such description to
include a legal description and address), together with Seller's rights to all
buildings, improvements and fixtures located thereupon and all construction in
progress, rights, privileges and appurtenances thereto (collectively, the "Owned
Real Property");
(b) all of the real property that is leased by such Seller and used
with respect to the operation of any Hospital consisting of the leased real
property described in Schedule 1.9(b), together with all buildings, improvements
and fixtures located thereupon and all construction in progress, rights,
privileges and appurtenances thereto (the "Leased Real Property") (the Owned
Real Property and the Leased Real Property are collectively referred to in this
Agreement as the "Real Property");
(c) all of the tangible personal property owned by such Seller with
respect to the operation of any Hospital, including all medical and other
equipment, furniture, fixtures,
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machinery, vehicles, office furnishings, computers, other data processing
equipment, related software applications and leasehold improvements (the
"Personal Property"), including, without limitation, the Personal Property
described in Schedule 1.9(c);
(d) all of such Seller's rights, to the extent assignable or
transferable, to all licenses, provider numbers, permits, approvals,
determinations of need, certificates of exemption, franchises, accreditations
and registrations and other governmental licenses, permits or approvals issued
to such Seller with respect to the ownership of the Assets and operation of any
Hospital (the "Licenses"), including, without limitation, the Licenses described
in Schedule 1.9(d);
(e) all of such Seller's interest, to the extent assignable or
transferable, in and to all real property and personal property leases with
respect to the operation of any Hospital (the "Leases"), including, without
limitation, those leases described in Schedule 1.9(e); it being understood that,
subject to the terms of Section 9.3, if any Lease is not assignable at the
Closing, but later becomes assignable (as a result of obtaining the
counterparty's consent or otherwise) such Lease shall at such time become an
Asset owned by Purchaser;
(f) all of such Seller's interest, to the extent assignable or
transferable, in and to all contracts and agreements (including, but not limited
to, purchase orders) with respect to the operation of any Hospital
(collectively, the "Contracts"), including, without limitation, those Contracts
described in Schedule 1.9(f); provided, however, the term Contracts as used in
this Agreement shall exclude, subject to Section 9.3, (i) multi-hospital
contracts as to which one of the Hospitals and one or more of Seller's or
Seller's affiliates' other acute care hospitals (which are not among the
Hospitals) participate (the "Multi-Facility Contracts") and (ii) all national or
regional contracts of Seller or any affiliate thereof which are made available
to any of the Hospitals by virtue of such Hospital being an affiliate of THC or
its affiliates (the "Xxxxx Affiliate Contracts") (the Multi-Facility Contracts
and the Xxxxx Affiliate Contracts collectively are referred to as the "Excluded
Multi-Facility Contracts"); it being understood that, subject to the terms of
Section 9.3, if any Contract is not assignable at the Closing, but later becomes
assignable (as a result of obtaining the counterparty's consent or otherwise)
such Contract shall at such time become an Asset owned by Purchaser;
(g) all of those advance payments, prepayments, prepaid expenses,
deposits and the like which exist as of the Closing Date, subject to the
prorations provided in Section 1.8 of this Agreement, which were made with
respect to the operation of any Hospital, the categories of which are set forth
on Schedule 1.9(g) (the "Prepaids");
(h) except as excluded by Sections 1.10(j) and 1.10(y), all
inventories of supplies, drugs, food, janitorial and office supplies and other
disposables and consumables located at any of the Hospitals, or used with
respect to the operation of any of the Hospitals (the "Inventory");
(i) except as excluded by Sections 1.10(d), 1.10(e), 1.10(h) and
1.10(o), all documents, records, operating manuals, files and computer software
with respect to the operation of any of the Hospitals, including, without
limitation, all patient records, medical records, employee records, financial
records with respect to the operation of any of the Hospitals, equipment
records, construction plans and specifications, and medical and administrative
libraries;
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(j) to the extent assignable, all rights in all warranties of any
manufacturer or vendor in connection with the Personal Property;
(k) all goodwill of the businesses evidenced by the Assets;
(l) all insurance proceeds arising in connection with property
damage to the Assets occurring after the Effective Date and prior to the
Effective Time, to the extent not expended on the repair or restoration of the
Assets;
(m) the names, symbols, telephone numbers and world-wide web
addresses used with respect to the operation of the Hospitals, including,
without limitation, the names of the Hospitals set forth on Schedule 1.9(m) and
all variants thereof;
(n) any current assets of Seller with respect to the operation of
any of the Hospitals (which are not otherwise specifically described above in
this Section 1.9) to the extent included in Net Working Capital, as determined
pursuant to Sections 1.2 and 1.4; and
(o) all claims of Seller (whether known or unknown, contingent or
otherwise) against third parties (other than affiliates of Seller) with respect
to the service and/or maintenance of any tangible Assets arising after the
Effective Date and prior to the Effective Time, other than those claims as to
which Seller has a right to money damages based on a prior expenditure of money
with respect to any such tangible Assets;
PROVIDED, HOWEVER, that the Assets shall not include the Excluded Assets as
defined in Section 1.10 below.
1.10 Excluded Assets. Notwithstanding anything to the contrary in Section
1.9, Seller shall retain the following assets of Seller (collectively, the
"Excluded Assets"):
(a) cash, cash equivalents and short-term investments;
(b) all intercompany receivables of Seller with any of Seller's
affiliates;
(c) any current assets of Seller with respect to the operation of
any of the Hospitals which are not included in Net Working Capital, as
determined pursuant to Sections 1.2 and 1.4;
(d) computer software, programs and hardware or data processing
equipment which is proprietary to Seller and/or Seller's affiliates, data
processing system manuals and licensed software materials, as more particularly
described in Schedule 1.10(d);
(e) all of Seller's or any affiliate of Seller's proprietary
manuals, marketing materials, policy and procedure manuals, standard operating
procedures and marketing brochures, data and studies or analyses;
(f) any asset which would revert to the employer upon the
termination of any Seller Plan, including assets representing a surplus or
overfunding of any Seller Plan;
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(g) the Excluded Multi-Facility Contracts;
(h) the names "Xxxxx Healthcare Corporation", "Xxxxx", "Xxxxx
HealthSystem", "OrNda HealthCorp", and any other names, symbols or world-wide
web addresses (including, without limitation, any world-wide web address
containing "xxxxxxxxxxx.xxx") not used exclusively at any of the Hospitals, all
abbreviations and variations thereof, and trademarks, trade names, service
marks, copyrights and any applications therefor, symbols and logos related
thereto, together with any promotional material, stationery, supplies or other
items of inventory bearing such names or symbols or abbreviations or variations
thereof;
(i) all current contracts between Seller and any affiliate of Seller
with respect to the operation of any Hospital, except those approved in writing
by Seller and Purchaser to be assigned to Purchaser on or after the Effective
Time;
(j) the portions of Inventory, Prepaids and other Assets disposed
of, expended or canceled, as the case may be, by any Seller after the Effective
Date and prior to the Effective Time in the ordinary course of business;
(k) assets owned and provided by vendors of services or goods to any
of the Hospitals;
(l) all accounts, notes, interest and other receivables of Seller,
including accounts, notes or other amounts receivable from physicians, and all
claims, rights, interests and proceeds related thereto, including all accounts
and other receivables, disproportionate share payments and cost report
settlements related thereto, arising from the rendering of services by Seller
prior to the Effective Time to inpatients and outpatients at any Hospital,
billed and unbilled, recorded and unrecorded, whether payable by private pay
patients, private insurance, third party payors, Medicare, Medicaid, TRICARE,
Blue Cross, or by any other source (collectively, "Accounts Receivable");
(m) all documents, records, correspondence, work papers and other
documents relating to the Accounts Receivable, the Seller Cost Reports or Agency
Settlements (the "Receivable Records");
(n) all claims, rights, interests and proceeds with respect to state
or local tax refunds (including but not limited to property tax) resulting from
periods prior to the Effective Time, and the right to pursue appeals of same;
(o) all of Seller's corporate or organizational record books and
minute books;
(p) any Owned Real Property not purchased by, or any Leased Real
Property not assigned to, Purchaser pursuant to Section 1.14(b)(ii);
(q) all insurance proceeds arising in connection with property
damage to any Owned Real Property not purchased by, or any Leased Real Property
not assigned to, Purchaser pursuant to Section 1.14(b)(ii);
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(r) all unclaimed property of any third party which is subject to
applicable escheat laws;
(s) all claims, rights, interests and proceeds (whether received in
cash or by credit to amounts otherwise due to a third party) with respect to
amounts overpaid by Seller to any third party with respect to periods prior to
the Effective Time (e.g. such overpaid amounts may be determined by billing
audits undertaken by Seller or Seller's consultants) and which are not included
in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4;
(t) all bank accounts of Seller;
(u) all rights, claims and choses in action of Seller and its
affiliates with respect to periods prior to the Effective Time, and any
payments, awards or other proceeds resulting therefrom with respect to periods
prior to the Effective Time, with the exception of any such rights, claims,
choses in action, payments, awards or other proceeds to the extent included in
Net Working Capital, as determined pursuant to Sections 1.2 and 1.4;
(v) all writings and other items that are protected from discovery
by the attorney-client privilege, the attorney work product doctrine or any
other cognizable privilege or protection, which are further described by way of
example, rather than limitation, on Schedule 1.10(v);
(w) all assets located outside the Commonwealth of Massachusetts;
provided that such assets are not recorded on the balance sheet of any Seller as
of August 31, 2004;
(x) those advance payments, prepayments, prepaid expenses, deposits
and the like, the categories of which are set forth on Schedule 1.10(x);
(y) any Non-Useable Inventory;
(z) Seller's current Medicare and Medicaid provider agreements and
provider numbers;
(aa) certain content of any of the Hospitals' website(s), as more
particularly described on Schedule 1.10(aa); and
(bb) any assets identified in Schedule 1.10(bb).
1.11 Assumed Obligations. On the Closing Date, Seller shall assign, and
Purchaser shall assume and agree to discharge on and after the Effective Time,
the following liabilities and obligations of Seller and only the following
liabilities and obligations (collectively, the "Assumed Obligations"):
(a) all current liabilities of Seller with respect to the operation
of any of the Hospitals prior to the Effective Time to the extent included in
Net Working Capital, as determined pursuant to Sections 1.2 and 1.4;
15
(b) the Contracts, but only to the extent of the obligations arising
thereunder with respect to events or periods on and after the Effective Time;
(c) the Leases, including the capital lease obligations of Seller
listed on Schedule 1.11(c) with respect to the Hospitals, but only to the extent
of the obligations arising thereunder with respect to events or periods on and
after the Effective Time;
(d) any and all obligations of Seller under the Worker Adjustment
and Retraining Notification Act ("WARN") with respect to the operation of the
Hospitals as a result of (i) the consummation of the transaction contemplated by
this Agreement (provided that Seller has, with respect to the operation of the
Hospitals, complied with WARN prior to the Effective Time), (ii) the acts of
Purchaser or any affiliate(s) of Purchaser on and after the Effective Time
(taking into account any employee terminations by Seller prior to the Effective
Time) or (iii) Purchaser's breach of its covenants with respect to the Hired
Employees as set forth in Section 5.3;
(e) the paid time off pay (excluding the Sick Pay Amount as of the
Closing Date, the assumption of which is set forth in Section 1.11(f)) to the
extent included in Net Working Capital;
(f) the Sick Pay Amount as of the Closing Date (as finally
determined pursuant to Section 1.4);
(g) all unpaid real and personal property taxes, if any, that are
not past due attributable to the Assets prior to the Effective Time, subject to
the prorations provided in Section 1.8;
(h) all unpaid bills for utilities being furnished to the Assets,
subject to the prorations provided in Section 1.8; and
(i) any other obligations and liabilities identified in Schedule
1.11(i).
It is expressly understood and agreed that Purchaser shall not assume nor shall
Purchaser be liable for any liability, obligation, governmental overpayment,
claim against or contract of any Seller, any affiliate of any Seller or any
Hospital of any kind or nature, whether or not accrued, whether fixed,
contingent or otherwise, whether known or unknown, and whether or not recorded
on the books and records of any Seller or any affiliate of any Seller, arising
out of any event occurring prior to the Effective Time, unless such liability,
obligation, claim or contract is expressly assumed by Purchaser pursuant to the
terms of this Agreement, the Bills of Sale or the Real Estate Assignments.
1.12 Excluded Liabilities. Notwithstanding anything to the contrary in
Section 1.11, Purchaser shall not assume or become responsible for any of
Seller's duties, obligations or liabilities that are not expressly assumed by
Purchaser pursuant to the terms of this Agreement, the Bills of Sale or the Real
Estate Assignments (the "Excluded Liabilities"), and Seller shall remain fully
and solely responsible for all of Seller's debts, liabilities, contract
obligations, expenses, obligations and claims of any nature whatsoever related
to the Assets or the Hospitals unless assumed by Purchaser under this Agreement,
in the Bills of Sale or in the Real Estate Assignments. The Excluded Liabilities
shall include, without limitation:
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(a) any current liabilities of Seller with respect to the operation
of any of the Hospitals prior to the Effective Time (i) which are not included
in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4 and (ii)
which are not otherwise specifically included in the Assumed Obligations;
(b) all liabilities of Seller arising out of or relating to any act,
omission, event or occurrence connected with the use, ownership or operation of
any of the Hospitals or any of the Assets prior to the Effective Time, other
than as specifically included in the Assumed Obligations;
(c) other than as specifically included in the Assumed Obligations,
all liabilities arising out of or relating to any act, omission, event or
occurrence prior to the Effective Time connected with Seller, or the operations
or activities of Seller (including all such liabilities arising out of or
relating to any claim, proceeding or investigation, collectively, "Litigation")
arising out of or relating to any such act, omission, event or occurrence prior
to the Effective Time including without limitation the Litigation set forth on
Schedule 2.11);
(d) all liabilities of Seller in connection with claims of
professional malpractice to the extent arising out of or relating to acts,
omissions, events or occurrences prior to the Effective Time;
(e) all liabilities of Seller for their respective shares of
matching contributions for eligible beneficiaries' 401(k) plans, Section 125
plans and other Seller Plans and all administrative costs associated with such
welfare benefit plans arising prior to the Effective Time;
(f) all liabilities of Seller relating to the Seller Cost Reports;
(g) all liabilities of Seller for violations of any law, regulation
or rule to the extent arising from acts or omissions prior to the Effective
Time, including, without limitation, those pertaining to Medicare and Medicaid
fraud or abuse;
(h) all liabilities of Seller under the Excluded Multi-Facility
Contracts;
(i) all liabilities of Seller for commissions or fees owed to any
finder or broker in connection with the transactions contemplated hereunder;
(j) all intercompany receivables of any Seller owed or payable to
any other Seller or any of Seller's affiliates;
(k) all liabilities and obligations of Seller in respect of periods
prior to the Effective Time arising under the terms of the Medicare, Medicaid,
Blue Cross, or other third party payor programs, and any liability of Seller
arising pursuant to the Medicare, Medicaid, Blue Cross, or any other third party
payor programs as a result of the consummation of any of the transactions
contemplated under this Agreement;
(l) other than as specifically included in the Assumed Obligations,
and subject to Sections 1.8 and 12.12, all federal, state, foreign or local tax
liabilities or obligations of Seller in
17
respect of periods ending prior to the Effective Time, including, without
limitation, any income tax, any franchise tax, any sales and/or use tax, and any
FICA, FUTA, workers' compensation and any and all other taxes due and payable as
a result of the exercise by the Hospitals' Employees of such employees' right to
vacation, sick leave and holiday benefits accrued while in the employ of Seller;
(m) other than as specifically included in the Assumed Obligations,
all liability for any and all claims by or on behalf of Seller's employees to
the extent such liability relates to the period ending prior to the Effective
Time, including, without limitation, liability relating to such time period for
(i) any pension, profit sharing, deferred compensation or any other employee
health and welfare benefit plans, (ii) any EEOC claim, wage and hour claim,
unemployment compensation claim or workers' compensation claim, and (iii) all
employee wages and benefits, including, without limitation, accrued vacation,
sick leave and holiday pay and taxes or other liability related thereto in
respect of Seller's employees;
(n) all liabilities or obligations (without regard to when such
liability or obligation is actually due and/or payable by Seller) arising out of
any breach by Seller prior to the Closing of any Lease or Contract, but only
with respect to the period from the date of the breach through the Closing;
(o) all liabilities or obligations arising at any time under those
Contracts identified in Section 1.10(i);
(p) amounts due from Seller or alleged to be due from Seller at any
time to Fallon Community Health Plan or any other third party payor in respect
of periods prior to the Effective Time, including, without limitation, any
Offset Amounts; and
(q) all liabilities or obligations identified on Schedule 1.12(q).
1.13 Disclaimer of Warranties. Except as expressly set forth in Article 2
hereof, the Assets consisting of the Real Property, the Personal Property and
the Inventory transferred to Purchaser will be sold by Seller and purchased by
Purchaser in their physical condition at the Effective Time, "AS IS, WHERE IS
AND WITH ALL FAULTS AND NONCOMPLIANCE WITH LAWS" WITH NO WARRANTY OF
HABITABILITY OR FITNESS FOR HABITATION, with respect to the Real Property, land,
buildings and improvements, and WITH NO WARRANTIES, INCLUDING, WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, with respect to the physical condition of the Personal Property and
Inventory, any and all of which warranties (both express and implied) Seller
hereby disclaims. All of the foregoing real and personal property shall be
further subject to normal wear and tear on the land, buildings, improvements and
equipment and normal and customary use of the inventory and supplies in the
ordinary course of business up to the Effective Time.
1.14 Risk of Loss. The risk of loss or damage to any of the Assets,
Personal Property, Owned Real Property, the Hospitals and all other property,
transfer of which is contemplated by this Agreement, shall remain with Seller
until the Effective Time and Seller shall maintain its
18
insurance policies covering the Assets, Personal Property, Owned Real Property,
the Hospitals and all other property through the Effective Time.
(a) With respect to the Hospitals (including the Real Property and
other Assets related thereto), if prior to the Closing, all or any part of one
or more Hospital is destroyed or damaged by fire or the elements or by any other
cause where the cost to repair, restore and/or replace such damage or
destruction is in the aggregate (the "Aggregate Damage") less than or equal to
twenty percent (20%) of the Purchase Price, the parties' duties and obligations
under this Agreement shall not be affected and, subject to the conditions
precedent to Closing set forth in Articles 6 and 7, the Closing shall proceed as
scheduled; provided, however, Seller shall assign, transfer and set over to
Purchaser all of Seller's right, title and interest in and to any insurance
proceeds on account of such damage or destruction and, if such insurance policy
proceeds are insufficient to repair, restore and/or replace the Hospital(s) or
other affected Assets, the difference between the cost to repair, restore and/or
replace and the amount of such proceeds shall be deducted from the Cash Purchase
Price. If prior to the Closing, all or any part of one or more Hospital is
destroyed or damaged by fire or the elements or by any other cause where the
Aggregate Damage exceeds twenty percent (20%) of the Purchase Price, Seller
shall promptly notify Purchaser in writing of the occurrence of such damage or
destruction and Purchaser may elect to (i) purchase such Hospitals, or take
assignment of such Leased Real Property, and, subject to the conditions
precedent to Closing set forth in Articles 6 and 7, the Closing shall proceed as
scheduled (provided, however, at the Closing Seller shall assign, transfer and
set over to Purchaser all of Seller's right, title and interest in and to any
insurance proceeds on account of such damage or destruction loss and, if such
insurance policy proceeds are insufficient to repair, restore and/or replace the
Hospital(s) or other affected Assets, the difference between the cost to repair,
restore and/or replace and the amount of such proceeds shall be deducted from
the Cash Purchase Price) or (ii) terminate this Agreement by written notice to
Seller no later than the date which is seven (7) calendar days after the date
(A) Seller notifies Purchaser in writing of the occurrence of such damage or
destruction and (B) Seller and Purchaser agree in writing upon the amount of the
Aggregate Damage (the "Casualty Termination Notice"); provided, however, that in
no event shall the Casualty Termination Notice be provided after the Closing,
provided, however, further (but subject to the last sentence of this Section
1.14(a)) that the Closing shall be delayed until Purchaser is given the
opportunity to give the Casualty Termination Notice. In no event shall any such
delay in the Closing affect or otherwise change the Termination Date set forth
in Section 8.1(g). If Purchaser and Seller are unable to agree upon the amount
of the Aggregate Damage, the amount of the Aggregate Damage shall be determined
by Centex Xxxxxxx (the "Independent Consultant") pursuant to Section 1.14(c) and
Purchaser's right to provide a Casualty Termination Notice, if any, shall be
pursuant to Section 1.14(c) (and not this Section 1.14(a)).
(b) If prior to the Closing, all or any part of a parcel of the Real
Property is made subject to an eminent domain proceeding which would in
Purchaser's reasonable judgment materially adversely impair access to the Real
Property or be materially adverse to the operation of the Hospitals, Purchaser
may elect to (i) purchase such affected Owned Real Property, or take assignment
of such Leased Real Property, and the Closing shall proceed as scheduled
(provided, however, at the Closing Seller shall assign, transfer and set over to
Purchaser all of Seller's right, title and interest in and to any award in such
eminent domain proceeding) or (ii) not purchase the affected Owned Real
Property, or not take assignment of such Leased Real Property, and, in such
19
event, an appropriate adjustment to the Cash Purchase Price shall be made by
Purchaser and Seller. If Purchaser and Seller are unable to agree upon the
amount of the adjustment described in subsection (ii) of the preceding sentence,
the adjustment shall be resolved by the Independent Consultant pursuant to
Section 1.14(c).
(c) If on and after the date which is fifteen (15) calendar days
after the initial occurrence described in either Section 1.14(a) or Section
1.14(b), Purchaser and Seller are unable to agree to a resolution of the
applicable matter (as described in the last sentence of Section 1.14(a) or the
last sentence of Section 1.14(b)), either Seller or Purchaser shall have the
right, by providing written notice to the other, to invoke the following process
described in this Section 1.14(c) in order to resolve the applicable dispute
(the "Independent Consultant Process Notice"): Within fifteen (15) calendar days
after Seller's or Purchaser's receipt of the Independent Consultant Process
Notice (the "Submittal Date"), each party shall submit to the other party and to
the Independent Consultant its proposed Aggregate Damage (and any applicable
Cash Purchase Price adjustment) as a result of the event(s) contemplated by
either Section 1.14(a) or 1.14(b), along with a detailed description of the
basis for such amount and any applicable adjustment. Within ten (10) calendar
days after the Submittal Date (the "Decision Date"), the Independent Consultant,
acting as an expert and not as an arbitrator, shall select either the Aggregate
Damage (and any applicable Cash Purchase Price adjustment) proposal of Seller or
the Aggregate Damage (and any applicable Cash Purchase Price adjustment)
proposal of Purchaser as the definitive amount of the Aggregate Damage (and any
applicable adjustment to the Cash Purchase Price). If the Aggregate Damage as
determined by the Independent Consultant exceeds twenty percent (20%) of the
Purchase Price, Purchaser shall have the right to terminate this Agreement by
delivery of a Casualty Termination Notice to Seller (provided that such Casualty
Termination Notice is provided no later than seven (7) calendar days after the
Decision Date). If either Purchaser or Seller fails to timely provide its
proposed Aggregate Damage (and any applicable Cash Purchase Price adjustment) to
the Independent Consultant, the Aggregate Damage (and any applicable Cash
Purchase Price adjustment) shall be the amount proposed by the submitting party
provided that the Aggregate Damage exceeds twenty percent (20%) of the Purchase
Price, Purchaser shall within seven (7) calendar days after the Submittal Date
have the right to provide a Casualty Termination Notice and terminate this
Agreement. If neither party submits its proposed Aggregate Damage (and any
applicable Cash Purchase Price adjustment) to the Independent Consultant, no
adjustment to the Cash Purchase Price shall be made and Purchaser shall not have
the right to provide a Casualty Termination Notice. The decision of the
Independent Consultant shall be conclusive and binding as between Purchaser and
Seller, and the costs of such review shall be borne by the party whose proposed
Aggregate Damage (and any applicable Cash Purchase Price adjustment) is not
selected by the Independent Consultant. Upon any such determination of the
adjustment to the Cash Purchase Price in accordance with this Section 1.14, the
parties shall, subject to the terms and conditions of this Agreement, consummate
the transactions contemplated by this Agreement at a mutually agreeable time and
place, in accordance with the provisions of this Agreement. If pursuant to
either Section 1.14(a) or 1.14(b), the amount of the Aggregate Damage (and any
applicable Cash Purchase Price adjustment) is to be determined by the
Independent Consultant and either the Submittal Date or the Decision Date falls
on a day which is on or after the Termination Date, the parties acknowledge and
agree that any such event shall not affect the Termination Date set forth in
Section 8.1(g).
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, each Seller jointly
and severally hereby represents, warrants and covenants to Purchaser as to the
following matters, except as disclosed in the disclosure schedule as of the
Effective Date, as may be amended pursuant to the terms of this Agreement (the
"Disclosure Schedule") hereby delivered by Seller to Purchaser. Except as
otherwise provided herein, Seller shall be deemed to remake all of the following
representations, warranties and covenants as of the Closing Date:
2.1 Authorization. Seller has full corporate power and authority to
enter into this Agreement and full power and authority to carry out the
transactions contemplated hereby.
2.2 Binding Agreement. All corporate and other actions required to be
taken by Seller to authorize the execution, delivery and performance of this
Agreement, all documents executed by Seller which are necessary to give effect
to this Agreement, and all transactions contemplated hereby, have been duly and
properly executed, taken or obtained by Seller. No other corporate or other
action on the part of Seller is necessary to authorize the execution, delivery
and performance of this Agreement, all documents necessary to give effect to
this Agreement and all transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller and, assuming due and valid
execution by Purchaser, this Agreement constitutes a valid and binding
obligation of Seller enforceable in accordance with its terms subject to (a)
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and (b)
limitations on the enforcement of equitable remedies.
2.3 Organization and Good Standing; No Violation.
(a) Except with respect to any Seller which is a partnership or a
limited liability company, each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each Seller which is a partnership or a limited liability company is duly
organized and validly existing under the laws of the state of its organization.
Each Seller has full power and authority to own, operate and lease its
properties and to carry on its businesses as now conducted.
(b) Except as set forth on Schedule 2.3(b), neither the execution
and delivery by Seller of this Agreement nor the consummation of the
transactions contemplated hereby by Seller nor compliance with any of the
material provisions hereof by Seller, will violate, conflict with or result in a
breach of any material provision of Seller's articles of incorporation or
bylaws, respectively or other organizational documents with respect to any
Seller which is a partnership or a limited liability company.
2.4 Contracts and Leases.
(a) Schedule 1.9(e) includes a list of all Leases in respect of Real
Property or Personal Property (i) which (A) require lease payments by any Seller
with respect to the
21
operation of any Hospital during the remaining term of such Lease in excess of
Twenty Five Thousand Dollars ($25,000), or (B) either have a remaining term in
excess of twelve (12) months or cannot be terminated by the applicable Seller
upon notice of thirty (30) calendar days or less, (ii) which are with any of the
Hospitals' referral sources (as determined by applicable health care laws, rules
and regulations), including, without limitation, any physicians on any
Hospital's medical staff, (iii) which are equipment leases treated as capital
leases for financial accounting purposes or (iv) in which any Seller is a lessee
of Real Property or an interest in Real Property. Schedule 1.9(e) and/or
Schedule 2.7(b) includes a list of all Leases in respect of Real Property or
Personal Property which contain a covenant not to compete or restrictive
covenant which is binding upon any Seller and/or the operation of any of the
Hospitals. The Leases set forth on Schedule 1.9(e) are referred to herein as the
"Material Leases".
(b) Schedule 1.9(f) includes a list of all Contracts (i) which (A)
require the payment by any Seller with respect to the operation of any Hospital
during the remaining term of such instrument in excess of Twenty Five Thousand
Dollars ($25,000), or (B) either have a remaining term in excess of twelve (12)
months or cannot be terminated by the applicable Seller upon notice of thirty
(30) calendar days or less, (ii) which are with any of the Hospitals' referral
sources (as determined by applicable health care laws, rules and regulations),
including, without limitation, any physicians on any Hospital's medical staff or
(iii) which relate to joint ventures (in the form of partnerships, limited
liability companies or corporations) in which any Seller has an equity interest.
Schedule 1.9(f) and/or Schedule 2.7(b) includes a list of all Contracts which
contain a covenant not to compete or restrictive covenant which is binding upon
any Seller and/or the operation of any of the Hospitals. The Contracts set forth
on Schedule 1.9(f) are referred to herein as the "Material Contracts".
(c) Except as set forth on Schedule 2.4(c), each Material Contract
and Material Lease is in full force and effect and is the valid and binding
obligation of Seller and, to the knowledge of Seller, of each other party
thereto, except where a failure of the Material Contracts or the Material Leases
to be in full force and effect is not material, individually or in the
aggregate, to the operation of the Hospitals. No provision of this Section
2.4(c) shall apply to any failure to obtain consents to the assignment of the
Contracts and Leases from the third parties to the Contracts and Leases in which
consent is required to assign the Contracts and Leases to Purchaser (the
"Contract and Lease Consents").
(d) Schedule 2.4(d) sets forth a list of the Excluded Multi-Facility
Contracts which are material to the operation of the Hospitals.
2.5 Required Consents. Except as set forth on Schedule 2.5 and the
rights of Fallon Foundation, Inc. pursuant to Sections 10.8 and 10.9 of the
Fallon Purchase Agreement (as defined below), Seller is not a party to or bound
by, nor are any of the Assets subject to, any mortgage, material Lien, deed of
trust, Material Lease, Material Contract, or any material order, judgment or
decree which (a) requires the consent of another to the execution of this
Agreement or (b) requires the consent of another to consummate the transactions
contemplated by this Agreement. The consummation of the transactions
contemplated by this Agreement will not result in a breach of any term or
provision of, or constitute (with or without notice or lapse of time or both) a
default under, any Material Contract or Material Lease to which Seller is a
party, or which is binding on Seller, or to which the Assets are subject. The
consummation of the
22
transactions contemplated by this Agreement will not give any other party to any
such Material Contract or Material Lease a right to cancel or terminate the
same, a right to modify or amend the terms thereof, or result in an acceleration
of the maturity or performance of any obligation under any such Material
Contract. No such breach, default, cancellation, termination, modification or
amendment or acceleration described in this Section 2.5 would prevent Seller
from consummating the transactions contemplated by this Agreement, or would
result in the creation of any Lien or liability on any material assets of
Seller, including without limitation the Assets. No provision of this Section
2.5 (other than the first sentence of this Section 2.5) shall apply to any
failure to obtain the Contract and Lease Consents. Prior to Closing, Seller will
give all notices required to be given to Fallon Foundation, Inc. under that
certain Amended and Restated Asset Purchase Agreement dated as of April 22,
1996, as amended, among S.V. Hospital, L.L.C., Provident Nursing Homes, Inc.,
OHM Services, Inc., OHM Health Initiatives, Inc., Clini-Tech Laboratories, Inc.,
Fallon Foundation, Inc., Saint Xxxxxxx Healthcare System, Inc., Saint Xxxxxxx
Hospital, Inc., SVH Services, Inc., Saint Xxxxxxx Management Corporation,
Certified Nursing Services, Inc., CliniTech Services, Inc., Saint Xxxxxxx
Faculty Practice, Inc., Saint Xxxxxxx Physician Associates, Inc., and Providence
House Nursing Home, Inc. (the "Fallon Purchase Agreement"), such that the rights
of first refusal granted to Fallon Foundation, Inc. under such agreement will
terminate prior to Closing. Except as set forth on Schedule 5.14, Purchaser will
acquire and own the Hospitals free and clear of all conditions, limitations and
obligations of Seller and its affiliates described in the Fallon Purchase
Agreement.
2.6 Compliance With Laws and Contracts.
(a) Except as set forth in Schedule 2.6(a), Seller, with respect to
the operation of the Hospitals, is in compliance with all applicable laws,
statutes, ordinances, orders, rules, regulations, policies, guidelines,
licenses, certificates, determinations of need, judgments or decrees of all
judicial or governmental authorities (federal, state, local, foreign or
otherwise), except where the failure to be in such compliance would not have a
material adverse effect on the Assets or the business of the Hospitals. Except
as set forth in Schedule 2.6(a), Seller, with respect to the operation of the
Hospitals, has not been charged with or given notice of, is not subject to any
corporate integrity or settlement agreement or subpoena binding on a successor
owner of any of the Hospitals, is not subject to any subpoena with respect to
any of the Hospitals, and to the best knowledge of Seller, Seller, with respect
to the operation of the Hospitals, is not under investigation with respect to,
in violation of, or under any obligation to take remedial action under, any
applicable (i) material law, statute, ordinance, rule, regulation, policy or
guideline promulgated, (ii) material license, certificate or determination of
need issued, or (iii) order, judgment or decree entered, by any federal, state,
local or foreign court or governmental authority relating to the Hospitals or
the business of the Hospitals. Notwithstanding the foregoing, no provision of
this Section 2.6(a) shall be deemed a representation or warranty by Seller as to
compliance with any Environmental Laws (as defined in Section 2.6(c) below).
(b) Except as set forth in Schedule 2.6(b), Seller's ownership and
operation of the respective Hospitals and the Assets are and have been in
compliance with all Environmental Laws, except where the failure to be in such
compliance would not have a material adverse effect on the Assets or the
business of the Hospitals. Each Seller has obtained all licenses, permits and
approvals necessary or required under all applicable Environmental Laws (the
"Environmental
23
Permits") for the ownership and operation of its respective Hospitals and the
Assets. All such Environmental Permits are in effect and, to Seller's knowledge,
no action to revoke or modify any of such Environmental Permits is pending.
There is not now pending or, to Seller's knowledge, threatened, any claim,
investigation or enforcement action by any governmental authority (whether
judicial, executive or administrative) concerning Seller's potential liability
under Environmental Laws in connection with the ownership or operation of the
Hospitals or the Assets. To Seller's knowledge, there has not been a release or
threatened release of any Hazardous Substance at, upon, in, under or from the
Hospitals or the Assets at any time At no time during Seller's ownership of the
Real Property, and to Seller's knowledge at no time during others' ownership of
the Real Property, have any Hazardous Substances been present on the Real
Property except as may be utilized as a matter of course in Hospital operations
and in accordance with applicable Environmental Laws.
(c) For the purposes of this Agreement, the term "Environmental
Laws" shall mean all state, federal or local laws, ordinances, codes or
regulations relating to Hazardous Substances or to the protection of the
environment, including, without limitation, laws and regulations relating to the
storage, treatment and disposal of medical and biological waste. For purposes of
this Agreement, the term "Hazardous Substances" shall mean (i) any hazardous or
toxic waste, substance, or material defined as such in (or for the purposes of)
any Environmental Laws, (ii) asbestos-containing material, (iii) medical and
biological waste, (iv) polychlorinated biphenyls, (v) petroleum products,
including gasoline, fuel oil, crude oil and other various constituents of such
products, and (vi) any other chemicals, materials or substances, exposure to
which is prohibited, limited or regulated by any Environmental Laws.
(d) Except as set forth in Schedule 2.6(d), To Seller's knowledge,
Seller has performed all material obligations relating to the Assets and the
business of the Hospitals, and is not in breach or default, nor do any
circumstances exist which with or without notice or lapse of time, or both,
would result in breach or default, nor is there any claim of such breach or
default with respect to any obligation to be performed, under any Material
Contract, Material Lease, guaranty, indenture or loan agreement relating to the
Assets or the business of the Hospitals, which breach or default or its
consequences might materially adversely affect the Assets or the business of the
Hospitals. No provision of this Section 2.6(d) shall apply to any failure to
obtain the Contract and Lease Consents.
(e) Seller is not in breach or default under, nor to Seller's
knowledge do any circumstances exist which with or without notice or lapse of
time, or both, would result in a breach or default under, nor is there any claim
of such breach or default with respect to, any of Seller's obligations described
on Schedule 5.14 relating to the operation of the Hospitals prior to the
Effective Time.
(f) Notwithstanding any provision to the contrary contained in this
Agreement, no provision of Section 2.6 shall be deemed a representation or
warranty by Seller as to compliance with the Americans with Disabilities Act.
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2.7 Title; Sufficiency.
(a) Except as set forth in Schedule 2.7(a), (i) each Seller has good
and marketable fee simple or leasehold title, as the case may be, to its
respective Real Property and (ii) each Seller has good and valid title to its
respective Personal Property.
(b) The Real Property and the Personal Property is held by each
respective Seller free and clear of all Liens, and is not, in the case of the
Real Property, subject to any rights-of-way, building or use restrictions,
exceptions, variances, reservations or limitations of any nature whatsoever
except, with respect to such properties, (i) Liens for current real property
taxes and assessments not yet due and payable, (ii) rights of way, building or
use restrictions, exceptions, easements, covenants, variances, reservations and
other limitations of any kind, if any, which do not materially impair the
ordinary business operations of any particular Hospital or for which, in respect
of matters affecting title to the Real Property, title insurance coverage has
been obtained, and (iii) other such encumbrances as are set forth in Schedule
2.7(b). None of the Real Property is subject to a pending, or to Seller's
knowledge threatened, condemnation or similar proceeding.
(c) The Inventory with respect to each Hospital is, and at the
Closing Date will be, maintained in such quality and quantities as is consistent
with such Hospital's historical practices.
(d) The Assets and the Excluded Assets comprise substantially all of
the property and assets used in the conduct of the businesses and operation of
the Hospitals.
2.8 Certain Representations with Respect to the Hospitals.
(a) All licenses, permits, certifications and determinations of need
which are necessary to operate the business of each respective Hospital by each
respective Seller are valid and in good standing, except where the failure to
have such licenses, permits, certifications and determinations of need would not
have a material adverse effect on the Assets or the business of the Hospitals.
Schedule 2.8(a) contains an accurate list of the material licenses, permits,
certifications, authorizations and determinations of need which are necessary to
operate the businesses of the Hospitals by Seller, true and complete copies of
which have been delivered to Purchaser or will be delivered promptly after the
Effective Date.
(b) Each Acute Care Hospital is duly accredited by the Joint
Commission on Accreditation of Healthcare Organizations ("JCAHO") for the period
set forth in Schedule 2.8(b). With respect to the Hospitals, Seller has
previously delivered to Purchaser or will promptly deliver after the Effective
Date, a true and complete copy of each Hospital's most recent JCAHO
accreditation survey report and deficiency list, if any; the most recent
Statement and Deficiencies and Plan of Correction on Form HCFA-2567; the most
recent state licensing report and list of deficiencies, if any; the most recent
fire marshal's survey and deficiency list, if any, and the corresponding plans
of correction or other responses.
(c) Each Acute Care Hospital is certified for participation in the
Medicare, Medicaid and TRICARE programs, has current and valid provider
contracts with each of such programs and is in compliance in all material
respects with the conditions of participation in such programs. Except as set
forth in Schedule 2.8(c), Seller has not received notices from the
25
regulatory authorities which enforce the statutory or regulatory provisions in
respect of any of the Medicare, Medicaid or TRICARE programs of any pending or
threatened investigations with respect to the operation of the Hospitals.
Seller, with respect to the operation of any Hospital, has not been excluded
from the Medicare or Medicaid programs or any state health care program, and
there is no pending or, to Seller's knowledge, threatened exclusion action
against Seller with respect to the operation of any Hospital.
(d) Seller has delivered or will promptly deliver to Purchaser after
the Effective Date, with respect to the operation of each Hospital, true and
exact copies of all cost reports which Seller filed with Medicare and Medicaid
for the last three (3) years, as well as all material correspondence and other
material documents relating to any disputes and/or settlements with Medicare or
Medicaid within the last three (3) years. Notices of Program Reimbursement have
been issued by the applicable fiscal intermediary with respect to the cost
reports of the Hospitals for Medicare, Medicaid (if required) and Blue Cross (if
required) through the periods set forth in Schedule 2.8(d) (the "Audit
Periods"). Each of such reports was timely filed. Seller has not received notice
of any material dispute between any Hospital and the applicable governmental
agency or private entity, or their intermediaries or representatives, regarding
such cost reports for periods subsequent to the periods specified in Schedule
2.8(d). There are no pending, or to Seller's knowledge, threatened material
claims by any of such programs against any Hospital with respect to the Audit
Periods or any period thereafter. To Seller's knowledge, Seller, with respect to
the operation of the Hospitals, is not subject to any pending but unassessed
Medicare or Medicaid claim payment adjustments, except to the extent Seller has
established adequate reserves for such adjustments.
(e) With respect to the operation of the Hospitals, no Seller has
any outstanding loan, grant or loan guarantee pursuant to the Xxxx-Xxxxxx Act
(42 USC Section 291a, et seq.) and the transaction contemplated hereby will not
result in any obligation on the part of Purchaser or any Hospital to repay any
such loans, grants, or loan guarantee or provide uncompensated care in
consideration thereof.
2.9 Brokers and Finders. Other than Citigroup and Bank of America,
neither Seller nor any affiliate thereof, nor any officer or director thereof,
has engaged any finder or broker in connection with the transactions
contemplated hereunder.
2.10 Financial Statements. The following have been or will be prepared
from the books and records of Seller (a) the unaudited financial statements of
each Seller with respect to the operation of each Hospital as of December 31,
2003 and December 31, 2002, and for the years ended December 31, 2003, December
31, 2002 and December 31, 2001 (the "Annual Financials"), (b) the unaudited
financial statements of each Seller with respect to the operation of each
Hospital for each month subsequent to June 30, 2001 through August 31, 2004 and
for the months then ended (the "Monthly Financials"), (c) the unaudited
financial statements of each Seller with respect to the operation of the
Hospitals for months subsequent to August 31, 2004 as made available pursuant to
Section 4.5 (the ("Interim Financials") (the Annual Financials, the Monthly
Financials and the Interim Financials are referred to herein collectively as the
"Unaudited Financials"), (d) the Interim Balance Sheets and (e) the Final
Balance Sheets (the Unaudited Financials, the Interim Balance Sheets and the
Final Balance Sheets are collectively referred to herein as the "Financial
Statements"). The Unaudited Financials are attached as
26
Schedule 2.10. The Financial Statements fairly present, or will fairly present
when prepared, the financial position and results of operations, as applicable,
of each Seller with respect to the operation of the Hospitals as of and for the
periods then ended, in each case in conformity with GAAP consistently applied
during such periods, except that the Financial Statements (i) do not reflect all
cost report adjustments, allocations or adjustments of overhead, intercompany
interest or income taxes, and other year-end adjustments, (ii) do not contain
footnotes, (iii) were prepared without physical inventories except for the Final
Balance Sheets for which a physical inventory will be taken in accordance with
Section 1.3, (iv) do not contain an unaudited statement of cash flow, (v) omit
substantially all the disclosures required by GAAP, (vi) are not restated for
subsequent events, (vii) may not reflect any adjustments for impairment of
long-lived assets or goodwill, or restructuring charges or the reclassification
of assets held for sale on the applicable balance sheet, (viii) do not reflect
accounts receivable sale transactions with an affiliate and (ix) may not fully
reflect the following liabilities: (A) vacation, holiday and similar accruals
and accruals in respect of Seller's or any affiliate of Seller's self-insured
employee health benefits, (B) liabilities payable in connection with workers'
compensation claims, (C) liabilities payable pursuant to any employee welfare
benefit plan (within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), maintained by Seller or any
affiliate of Seller on account of any of the Hospitals' employees, the chief
executive officers of the Hospitals ("CEOs"), the chief financial officers of
the Hospitals ("CFOs"), the chief operating officers of the Hospitals ("COOs")
and the chief nursing officers of the Hospitals ("CNOs"), (D) federal, state and
local income or franchise taxes and (E) payroll and bonuses payable and
vacation, holiday and similar accruals with respect to the CEOs, CFOs, COOs and
CNOs. Except for liabilities disclosed in the Financial Statements, liabilities
incurred in the ordinary course of business since the date of the latest
available Unaudited Financials consistent with past practice or liabilities
disclosed in this Agreement, Seller has no material liabilities or obligations
(including without limitation securitization transactions and off-balance sheet
arrangements) of any nature with respect to the operation of the Hospitals.
2.11 Legal Proceedings. Except as set forth on Schedule 2.11, there is no
material Litigation pending or, to the best knowledge of Seller, threatened
relating to or affecting Seller with respect to the operation of the Hospitals
or any of the Assets before any court or governmental body (whether judicial,
executive or administrative). Seller, with respect to the operation of the
Hospitals, is not subject to any judgment, order, decree or other governmental
restriction specifically (as distinct from generically) applicable to it or its
assets, including the Assets, which would have a material adverse effect on the
Assets or the business condition (financial or otherwise) of the Hospitals.
There is no Litigation pending or, to the best knowledge of Seller, threatened,
relating to or affecting Seller with respect to the operation of any Hospital
before any court or governmental body (whether judicial, executive or
administrative) which: (a) materially adversely affects or seeks to prohibit,
restrain or enjoin the execution and delivery of this Agreement; (b) materially
adversely affects or questions the validity or enforceability of this Agreement;
(c) questions the power or authority of any Seller to carry out the transactions
contemplated by, or to perform its obligations under, this Agreement; or (d)
would result in any change which would materially adversely affect the ability
of any Seller to perform any of its obligations hereunder.
27
2.12 Employee Benefits.
(a) Schedule 2.12(a) lists all employee benefit plans or other
similar arrangements, whether oral or written, which Seller or any ERISA
Affiliate sponsors, maintains, or to which contributions are made, for the
benefit of employees of Seller who perform services for the Hospitals,
including, without limitation, (1) any "employee benefit plan" (within the
meaning of Section 3(3) of ERISA), (2) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, agreement or
arrangement, and (3) any plan, agreement or arrangement providing for "fringe
benefits" or perquisites to employees, officers, directors or agents, including
but not limited to benefits relating to automobiles, clubs, vacation, child
care, parenting, sabbatical, sick leave, medical, dental, hospitalization, life
insurance and other types of insurance. The plans, agreements and arrangements
described in this Section 2.12 are referred to herein as "Seller Plans".
(b) None of the Seller Plans is, and within the last six years
neither Seller nor any ERISA Affiliate has contributed to or had an obligation
to contribute to, (i) a plan subject to Title IV of ERISA or Section 412 of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) a "multiemployer
plan" (within the meaning of Section 3(37) of ERISA), (iii) a "multiple employer
plan" (within the meaning of Section 3(40) of ERISA or Section 413(c) of the
Code), (iv) a "voluntary employees' beneficiary association" (within the meaning
of Section 501(c)(9) of the Code), or (v) a "multiple employer welfare
arrangement" (within the meaning of Section 3(40)(A) of ERISA).
(c) With respect to each Seller Plan, to Seller's knowledge, Seller
does not have any direct or indirect, actual or contingent liability, other than
to make payments for contributions, premiums or benefits when due in the
ordinary course, all of which payments that are due having been made. Neither
the Hospitals nor any of the Assets are subject to any lien under ERISA or the
Code.
(d) All of the Seller Plans have been administered in material
compliance with ERISA and the applicable provisions of the Code. There are no
"accumulated funding deficiencies" within the meaning of ERISA or the Code or
any federal excise tax or other liability on account of any deficient fundings
in respect of the Seller Plans. No reportable event(s) (within the meaning of
ERISA) or prohibited transaction(s) (within the meaning of the Code), has
occurred in respect of any of the Seller Plans that would result in any material
liability to Seller. Other than claims for benefits, there are no pending or, to
Seller's knowledge, threatened claims relating to the Seller Plans. To Seller's
knowledge, none of the Seller Plans discriminates in operation in favor of
employees who are officers or who are highly compensated, except as permitted
under the Code and ERISA. To Seller's knowledge, all returns, reports,
disclosure statements and premium payments required to be made under ERISA and
the Code with respect to any of the Seller Plans have been timely filed or
delivered, except where any such failure to file or deliver would not have a
material adverse effect on Seller. Except as set forth on Schedule 2.12(d) and
except for routine random audits or submissions by Seller to the Voluntary
Compliance Resolution Program, none of the Seller Plans have been audited or
investigated by either the Internal Revenue Service, the Department of Labor or
the
28
Pension Benefit Guaranty Corporation within the last five (5) years, and
there are no outstanding issues with reference to any of the Seller Plans
pending before such governmental agencies.
(e) With respect to the Seller Plans, except as otherwise contained
in the Assumed Obligations or as set forth in Section 5.3 of this Agreement,
there is no liability, direct or indirect, absolute or contingent, which the
Purchaser shall assume, or could reasonably be expected to assume, as part of
the transactions contemplated by this Agreement or otherwise.
(f) No amounts payable by Seller under any contract, agreement or
arrangement with respect to the operation of any Hospital will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code. Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby, alone or in connection with a related
event, will (i) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise) becoming
due to any employee of Seller from the Seller under any Seller Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Seller Plan or otherwise or (iii) result in any acceleration of the time of
payment or vesting of any such benefits to any material extent.
(g) For purposes of this Section 2.12 and the Agreement, "ERISA
Affiliate" means any Person that is a member of "controlled group of
corporations" with, or is under "common control" with, or is a member of the
same "affiliated service group" with the Seller, as defined in Section 414 of
the Code.
(h) Pursuant to all of the Seller Plans and collective bargaining
agreements relating to any of the Hospitals' Employees who are unionized, the
Hospitals' Employees are not entitled to receive any of the credits reflected by
the Sick Pay Amount unless such employees actually absent themselves from work
(in a manner which is consistent with the terms of the applicable Seller Plans)
and claim that they are sick during such periods of absence.
2.13 Personnel.
(a) Schedule 2.13(a) sets forth a complete list (as of the date set
forth therein) of names, positions and current annual salaries or wage rates,
bonus and other compensation and/or benefit arrangements, the paid time off pay,
and period of service credited for vesting as of the date thereof of all
full-time and part-time employees of Seller with respect to the operation of the
Hospitals and indicating whether such employee is a part-time or full-time
employee.
(b) Except as set forth on Schedule 2.13(b), there are no labor
union or collective bargaining agreements in effect with respect to the
employees of Seller with respect to the operation of the Hospitals. Except as
set forth on Schedule 2.13(b), there is no unfair labor practice complaint
against Seller pending, or to the best knowledge of Seller threatened, before
the National Labor Relations Board with respect to the operation of the
Hospitals. Except as set forth on Schedule 2.13(b), there is no labor strike,
arbitration, dispute, slowdown or stoppage, and no union organizing campaign,
pending, or to the best knowledge of Seller threatened by or involving the
employees of Seller with respect to the operation of the Hospitals.
(c) Schedule 2.13(c) sets forth a complete list (as of the date set
forth therein) of the names and positions of all full-time employees of Seller
with respect to the operation of the
29
Hospitals that have been terminated without cause during the ninety (90) days
immediately preceding the Effective Date.
2.14 Insurance. Seller maintains, and has maintained, without
interruption, at all times during each Seller's respective ownership of the
Hospitals, self-insurance or policies or binders of insurance covering such
risks and events, including personal injury, property damage, malpractice and
general liability, to provide adequate and sufficient insurance coverage for all
the assets and operations of the Hospitals. Schedule 2.14 contains a list of all
such insurance maintained by Seller with respect to the operation of the
Hospitals as of the Effective Date.
2.15 Solvency. No Seller is insolvent and no Seller will be rendered
insolvent as a result of any of the transactions contemplated by this Agreement.
For purposes hereof, the term "solvency" means that: (a) the fair salable value
of each Seller's tangible assets is in excess of the total amount of its
respective liabilities (including for purposes of this definition all
liabilities, whether or not reflected on a balance sheet prepared in accordance
with GAAP, and whether direct or indirect, fixed or contingent, secured or
unsecured, and disputed or undisputed); (b) each Seller is able to pay its
respective debts or obligations in the ordinary course as they mature; and (c)
each Seller has capital sufficient to carry on its respective businesses and all
businesses which it is respectively about to engage.
2.16 Taxes and Tax Returns. Seller has duly filed all federal, state,
foreign and local Tax Returns required to be filed by it (all of which are true
and correct in all material respects) and has duly paid or made provision for
the payment of all Taxes (including any interest or penalties) which are due and
payable, whether or not in connection with such returns. Seller, with respect to
the operation of the Hospitals, has withheld proper and accurate amounts from
its employees' compensation, and made deposits of all such withholdings, in
material compliance with all withholding and similar provisions of the Code and
any and all other applicable laws. There are no Liens for Taxes upon the Assets,
except for statutory Liens for current Taxes not yet due and payable or which
may hereafter be paid without penalty or which are being contested in good faith
by appropriate proceedings. Seller does not or will not have any liability for
the Taxes of any Person (other than an affiliate of Seller under Internal
Revenue Service regulation 1.1502-6 or any similar provision of state, local or
foreign law), as a transferee or successor, by Contract or otherwise. No Person
(other than Seller or any affiliate of Seller) has (a) provided tax advice to
Seller or THC in connection with the transactions contemplated by this Agreement
and (b) limited (expressly or otherwise) Seller's or THC's ability to disclose
the tax treatment or tax structure of, and such advisor's tax strategies with
respect to, the transactions contemplated by this Agreement. For purposes of
this Agreement, "Tax" or "Taxes" shall mean any tax of any kind, including,
without limitation, all income, unrelated business income, gross receipts,
license, payroll, employment, excise, severance, occupation, privilege, premium,
net worth, windfall profits, environmental (including taxes under section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security, unemployment, disability, real property, personal property,
recording, stamp, sales, use, service, service use, transfer, registration,
escheat, unclaimed property, value added, alternative or add-on minimum,
estimated or other tax, assessment, charge, levy or fee of any kind whatsoever,
including payments or services in lieu of Taxes, interest or penalties on and
additions to all of the foregoing, which are due or alleged to be due to any
governmental authority, whether disputed or not, imposed by the United States or
by any foreign country, or by any state, municipality, subdivision or
instrumentality of the
30
United States or of any foreign country, or by any other taxing authority. For
purposes of this Agreement, "Tax Return" shall mean any return, report,
information return or amendment or other document (including any related or
supporting information) with respect to Taxes.
2.17 Seller Knowledge. References in this Agreement to "Seller's
knowledge", "knowledge of Seller" or the "best knowledge of Seller" mean the
actual knowledge of the CEOs, CFOs, COOs and CNOs of the Hospitals, the Senior
Vice President, Regional Operations, Central/Northeast Region (which as of the
Effective Date is Xxxxx Xxxxxxx) and the Vice President, Regional Finance,
Central/Northeast Region (which as of the Effective Date is Xxxxxx X. Xxxxxxxx),
without independent investigation. No constructive or imputed knowledge shall be
attributed to any such individual by virtue of any position held, relationship
to any other Person or for any other reason.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated by this Agreement, Purchaser hereby represents,
warrants and covenants to Seller as to the following matters as of the Effective
Date and, except as otherwise provided herein, shall be deemed to remake all of
the following representations, warranties and covenants as of the Closing Date:
3.1 Authorization. Purchaser has full corporate power and authority to
enter into this Agreement and has full corporate power and authority to carry
out the transactions contemplated hereby.
3.2 Binding Agreement. All corporate and other actions required to be
taken by Purchaser to authorize the execution, delivery and performance of this
Agreement, all documents executed by Purchaser which are necessary to give
effect to this Agreement, and all transactions contemplated hereby, have been
duly and properly taken or obtained by Purchaser. No other corporate or other
action on the part of Purchaser is necessary to authorize the execution,
delivery and performance of this Agreement, all documents necessary to give
effect to this Agreement and all transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Purchaser and,
assuming due and valid execution by Seller, this Agreement constitutes a valid
and binding obligation of Purchaser enforceable in accordance with its terms
subject to (a) applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors' rights generally from time to time in effect and
(b) limitations on the enforcement of equitable remedies.
3.3 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, qualified to do business in the Commonwealth of Massachusetts, and has
full corporate power and authority to own, operate and lease its properties and
to carry on its business as now conducted.
3.4 No Violation. Neither the execution and delivery by Purchaser of
this Agreement nor the consummation of the transactions contemplated hereby nor
compliance with any of the
31
material provisions hereof by Purchaser will violate, conflict with or result in
a breach of any material provision of the Articles of Incorporation, Bylaws or
other organizational documents of Purchaser.
3.5 Brokers and Finders. Except as described on Schedule 3.5, neither
Purchaser nor any affiliate thereof nor any officer or director thereof has
engaged any finder or broker in connection with the transactions contemplated
hereunder.
3.6 Representations of Seller. Purchaser acknowledges that, except as
set forth in Article 2 hereof, it is purchasing the Assets consisting of the
Real Property, the Personal Property and the Inventory on as "AS IS, WHERE IS"
basis (as more particularly described in Section 1.13), and that Purchaser is
not relying on any representation or warranty (expressed or implied, oral or
otherwise) made on behalf of Seller other than as expressly set forth in this
Agreement.
3.7 Legal Proceedings. Except as described on Schedule 3.7, there are no
claims, proceedings or investigations pending or, to the best knowledge of
Purchaser, threatened relating to or affecting Purchaser or any affiliate of
Purchaser before any court or governmental body (whether judicial, executive or
administrative) in which an adverse determination would adversely affect the
ability of Purchaser to consummate the transactions contemplated hereby. Neither
Purchaser nor any affiliate of Purchaser is subject to any judgment, order,
decree or other governmental restriction specifically (as distinct from
generically) applicable to Purchaser or any affiliate of Purchaser which
adversely affects the ability of Purchaser to consummate the transactions
contemplated hereby.
3.8 Tax Advice. No Person (other than Purchaser or any affiliate of
Purchaser) has (a) provided tax advice to Purchaser in connection with the
transactions contemplated by this Agreement and (b) limited (expressly or
otherwise) Purchaser's ability to disclose the tax treatment or tax structure
of, and such advisor's tax strategies with respect to, the transactions
contemplated by this Agreement.
3.9 Ability to Perform. Purchaser has the ability to obtain funds in
cash in amounts equal to the Cash Purchase Price by means of credit facilities
or otherwise and will at the Closing have immediately available funds in cash,
which are sufficient to pay the Cash Purchase Price and to pay any other amounts
payable pursuant to this Agreement and to consummate the transactions
contemplated by this Agreement.
3.10 Solvency. Purchaser is not insolvent and will not be rendered
insolvent as a result of any of the transactions contemplated by this Agreement.
For purposes hereof, the term "solvency" means that: (a) the fair salable value
of Purchaser's tangible assets is in excess of the total amount of its
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with GAAP, and
whether direct or indirect, fixed or contingent, secured or unsecured, and
disputed or undisputed); (b) Purchaser is able to pay its debts or obligations
in the ordinary course as they mature; and (c) Purchaser has capital sufficient
to carry on its businesses and all businesses which it is about to engage.
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3.11 Purchaser Knowledge. References in this Agreement to "Purchaser's
knowledge or "the best knowledge of Purchaser" mean the actual knowledge of the
Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of
Purchaser, without independent investigation. No constructive or imputed
knowledge shall be attributed to any such individual by virtue of any position
held, relationship to any other Person or for any other reason.
ARTICLE 4
COVENANTS OF SELLER
4.1 Access and Information; Inspections. From the Effective Date through
the Effective Time, Seller shall afford to the officers and agents of Purchaser
(which shall include accountants, attorneys, bankers and other consultants and
agents of Purchaser) full and complete access during normal business hours to
and the right to inspect the plants, properties, books, accounts, records and
all other relevant documents and information with respect to the assets,
liabilities and business of the Hospitals. From the Effective Date through the
Effective Time, Seller shall furnish Purchaser with such additional financial
and operating data and other information in Seller's possession as to businesses
and properties of the Hospitals as Purchaser or its representatives may from
time to time reasonably request, without regard to where such information may be
located. Purchaser's right of access and inspection shall be exercised in such a
manner as not to interfere unreasonably with the operations of the Hospitals.
Such access may include consultations with the personnel of Seller and
consultations and/or contact with physicians on the medical staff at any of the
Hospitals; provided, however, that before Purchaser consults with and/or meets
any of the physicians on the medical staff at any of the Hospitals (other than
Xx. Xxxxxx X. Xxxxx, the chief executive officer of the Fallon Clinic), (a)
Purchaser shall provide Seller with written notice thereof at least two (2)
business days prior to any such meeting (which notice shall include the identity
of such physicians and the date and time of the meeting(s); provided (i)
Purchaser's notice pursuant to this clause (a) may be an electronic mail to Xxxx
X'Xxxxx at his electronic mail address of xxxx.x'xxxxx@xxxxxxxxxxx.xxx, with a
concurrent copy by electronic mail to J. Xxxxx XxXxxxxx at his electronic mail
address of xxxxx.xxxxxxxx@xxxxxxxxxxx.xxx and (ii) that Purchaser shall not be
in breach of this Section 4.1 if during such meeting(s) Purchaser meets with
additional physicians not originally specified in a notice to Seller as long as
Purchaser promptly thereafter provides Seller with a written notice which sets
forth the identity of such additional physicians) and (b) Seller shall have the
opportunity to be present at any such meetings. Further, Purchaser may, at its
sole cost and expense (except as otherwise provided in Section 12.12), undertake
environmental, mechanical and structural surveys of the Hospitals. Purchaser
shall coordinate its access and inspection activities contemplated by this
Section 4.1 through Xxxx X'Xxxxx or his designee.
4.2 Conduct of Business. On and after the Effective Date and prior to
the Effective Time, and except as otherwise consented to or approved by an
authorized officer of Purchaser in writing or as specifically required by this
Agreement, Seller shall, with respect to the operation of the Hospitals:
(a) carry on its respective businesses with respect to the operation
of the Hospitals in substantially the same manner as presently conducted and not
make any material change in personnel, operations, finance, accounting policies
(unless Seller is required to adopt such
33
changes under GAAP or Seller's affiliates adopt such changes on a company-wide
basis, in which event Seller shall give Purchaser prompt written notice
thereof), or real or personal property;
(b) maintain each Hospital and all parts thereof and all other
Assets in operating condition in a manner consistent with past practices,
ordinary wear and tear excepted;
(c) perform all of its material obligations under agreements
relating to or affecting each Hospital, its respective operations or the Assets;
(d) keep in full force and effect present insurance policies or
other comparable self-insurance; and
(e) use its reasonable efforts to maintain and preserve its
respective business organizations intact, retain its respective present
employees at each Hospital and maintain its respective relationships with
physicians, suppliers, customers and others having business relationships with
each Hospital and take such actions as are necessary and use its reasonable
efforts to cause the smooth, efficient and successful transition of business
operations and employee relations to the Purchaser as of the Effective Time.
4.3 Negative Covenants. From the Effective Date until the Effective
Time, with respect to the operation of the Hospitals, Seller shall not, without
the prior written consent of Purchaser or except as may be required by law:
(a) amend or terminate any of the Contracts, enter into any new
contract or commitment, or incur or agree to incur any liability, except in the
ordinary course of business (which ordinary course of business shall include
renewals of any Contract), and in no event with respect to any such contract,
commitment or liability as to which the total to be paid in the future under the
contract, commitment or liability exceeds Twenty-Five Thousand Dollars
($25,000);
(b) increase compensation payable or to become payable or make any
bonus payment to or otherwise enter into one or more bonus agreements with any
employee, except in the ordinary course of business in accordance with Seller's
customary personnel policies; provided, however, this Section 4.3(b) shall not
apply to (i) agreements or arrangements with any of the CEOs, CFOs, COOs or CNOs
(collectively, the "Leadership Team") which are consistent with the practices of
the affiliates of Seller on a regional or nationwide basis, provided that Seller
gives Purchaser prompt written notice thereof, (ii) any non-recurring payments
or proposed non-recurring payments by Seller or any affiliate of Seller to any
of the Hospitals' Employees (including any member of the Leadership Team) to
provide an incentive to such Hospitals' Employees (or to any member of the
Leadership Team) to remain employed at the Hospitals through the Effective Time,
provided that Seller gives Purchaser prompt written notice thereof, or (iii) any
wage increases and/or other changes in the terms and conditions of
union-represented employees pursuant to the terms of any collective bargaining
agreement between any Seller and any labor organization covering such employees;
(c) create, assume or permit to exist any new debt, mortgage, deed
of trust, pledge or other lien or encumbrance upon any of the Assets;
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(d) acquire (whether by purchase or lease) or sell, assign, lease,
or otherwise transfer or dispose of any property, plant or equipment, except in
the ordinary course of business with comparable replacement thereof;
(e) except with respect to previously budgeted expenditures that are
reflected on written capital budgets previously provided by Seller to Purchaser,
purchase capital assets or incur costs in respect of construction in progress;
(f) take any action outside the ordinary course of business;
(g) reduce Inventory except in the ordinary course of business; or
(h) incur or record trade accounts payable with respect to the
Hospitals other than in the ordinary course of business.
For purposes of this Section 4.3, Seller shall be deemed to have obtained
Purchaser's prior written consent to undertake the actions otherwise prohibited
by this Section 4.3 if Seller gives Purchaser written notice of a proposed
action and Seller does not receive from Purchaser a written notice of objection
to such action within five (5) business days after Purchaser receives Seller's
written notice. Notwithstanding any provision to the contrary contained in this
Agreement, Seller shall not be prohibited from engaging in any act which would
otherwise violate any of Sections 4.3(a) (but not with respect to amendments or
terminations of Contracts under Section 4.3(a)), 4.3(c), 4.3(d) (but only with
respect to acquisitions of any property, plant or equipment under Section
4.3(d)), or 4.3(h) if Seller reasonably believes such action is required on an
emergency basis, or the absence of which would have a material adverse effect on
the ability of the Hospitals to operate in accordance with their historical
manner of operations. If Seller is unable to give Purchaser prior notice that it
intends to take any such act described in the immediately preceding sentence
(which notice may be telephonic notice to Xxxxx X. Xxxxx or his designee) or
obtain Purchaser's consent to such act, Seller shall give Purchaser prompt
written notice subsequent to taking any act described in the immediately
preceding sentence and Purchaser may elect prior to Closing, in its sole
discretion, to not (i) assume the applicable arrangement or trade accounts
payable at Closing or (ii) acquire any property, plant or equipment acquired
under the preceding sentence of this Section 4.3.
4.4 Required Approvals. Between the date of this Agreement and the
Closing Date, Seller will: (a) use its reasonable commercial efforts to obtain,
as promptly as practicable, all material Governmental Authorizations required of
Seller to consummate the transactions contemplated by this Agreement (including,
without limitation, those of governmental and regulatory authorities) or which
Purchaser reasonably deems necessary or appropriate, (b) reasonably cooperate
with Purchaser and its representatives and attorneys in the preparation of any
document or other material which may be required by any governmental agency as a
predicate to or result of the transactions contemplated in this Agreement, (c)
provide such other information and communications to Governmental Entities as
such Governmental Entities may reasonably request; and (d) cooperate with
Purchaser in Purchaser's obtaining, as soon as practicable, all material
Governmental Authorizations required of Purchaser to consummate the transactions
contemplated hereby; provided, however, that it shall be Purchaser's
responsibility to obtain all Governmental Authorizations required to carry out
the transactions contemplated by
35
this Agreement. For purposes of this Agreement, (i) "Governmental Entities"
shall mean any local, state or federal government, including each of their
respective branches, departments, agencies, commissions, boards, bureaus,
courts, instrumentalities or other subdivisions, including the Massachusetts
Department of Public Health, the Medicare and Medicaid programs, TRICARE and
fiscal intermediaries, and (ii) "Governmental Authorizations" shall mean all
licenses, permits, certificates, no objection letters, clearances and other
authorizations, consents and approvals of any Governmental Entity which are
required to consummate any of the transactions contemplated hereby or to operate
the Hospitals as currently operated under any law, including provider agreements
with the Medicare and Medicaid programs.
4.5 Additional Financial Information.
(a) Within thirty (30) calendar days following the end of each
calendar month prior to Closing, Seller shall deliver to Purchaser complete
copies of the unaudited balance sheets and related unaudited statements of
income relating to Seller with respect to the operation of the Hospitals for
each month then ended, together with corresponding year-to-date amounts, which
presentation shall be consistent with the provisions of Section 2.10 which are
applicable to the Financial Statements.
(b) In the event Purchaser reasonably determines that in order to
comply with applicable laws, including, without limitation, Purchaser's
reporting obligations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (pursuant to contractual obligations or otherwise), Purchaser
must obtain audited or unaudited financial statements of Seller with respect to
the operations of the Hospitals for additional periods not covered by the
Financial Statements (the "Other Financial Statements"), Seller shall use its
good faith efforts to cooperate with Purchaser in the preparation of such Other
Financial Statements, the cost of which shall be borne by Purchaser. If
Purchaser determines that audited financial statements are required, such
audited financial statements shall be accompanied by an opinion of KPMG and will
fairly present the financial position and results of operations of Seller with
respect to the operation of the Hospitals as of and for the periods then ended.
The audited financial statements delivered pursuant to this Section 4.5(b) shall
be prepared in conformity with GAAP and shall meet the requirements of
Regulation S-X promulgated under the Exchange Act. Purchaser shall bear all
costs and expenses related to the preparation and delivery of any audited
financial statements requested by Purchaser pursuant to this Section 4.5(b).
4.6 No-Shop.
(a) From and after the Effective Date until the earlier of the
Closing Date or the termination of this Agreement, Seller shall not, and shall
cause its respective affiliates, officers, directors, employees, investment
bankers or agents to not, without the prior written consent of Purchaser: (i)
offer for sale or lease the assets of the Hospitals, the Assets (or any material
portion thereof), or any portion of the capital stock of any Seller, whether by
merger, consolidation, tender offer or otherwise; (ii) solicit, encourage (by
way of furnishing non-public information or otherwise), negotiate or take other
action to facilitate offers to buy all or any material portion of any of the
Hospitals, the Assets, or any portion of the capital stock of any Seller,
whether by merger, consolidation, tender offer or otherwise; (iii) hold
discussions with any party (other than Purchaser) looking toward such an offer
or solicitation; or (iv) enter into
36
any agreement with any party (other than Purchaser) with respect to the sale or
other disposition of any of the Hospitals, the Assets or any portion of the
capital stock of any Seller, whether by merger, consolidation, tender offer or
otherwise. Notwithstanding the foregoing, this Section 4.6 shall not be
construed to prohibit Seller or its affiliates from engaging in corporate
transactions involving Seller's or Seller's affiliates' stock or securities,
including macro-level mergers, reorganizations or other transactions, so long as
the terms thereof do not contemplate the sale or lease or other disposition of
the Hospitals or the Assets.
(b) Any reference in this Agreement to an "affiliate" shall mean any
Person directly or indirectly controlling, controlled by or under common control
with a second Person; provided, however, an "affiliate" shall not include the
stockholders of THC, the stockholders of Vanguard Health Systems, Inc., a
Delaware corporation ("Vanguard"), or any officer or director of any Person. The
term "control" (including the terms "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. A "Person" shall mean
any natural person, partnership, corporation, limited liability company,
association, trust or other legal entity.
4.7 Seller's Efforts to Close. Seller shall use its reasonable
commercial efforts to satisfy all of the conditions precedent set forth in
Articles 6 and 7 to its or Purchaser's obligations under this Agreement to the
extent that Seller's action or inaction can control or influence the
satisfaction of such conditions.
4.8 Title Matters. As soon as practicable after the Effective Date,
Seller shall deliver to Purchaser (a) a preliminary binder or title
commitment(s) (the "Title Commitment") sufficient for the issuance of an ALTA
Extended Coverage Owner's Title Insurance Policy with respect to the Owned Real
Property (the "Owner's Title Policy") and an ALTA Extended Coverage Leasehold
Title Policy with respect to any ground lease specified on Schedule 4.8 (the
"Leasehold Title Policy") (the Owner's Title Policy and the Leasehold Title
Policy are collectively referred to in this Agreement as the "Title Policy"),
issued by Chicago Title Insurance Company (the "Title Company"), together with
true, correct and legible copies of all instruments referred to therein as
conditions or exceptions to title (the "Title Instruments") and (b) ALTA surveys
of the Owned Real Property and real property subject to any ground lease
specified on Schedule 4.8 complying with the Minimum Standard Detail
Requirements for ALTA/ASCM Land Title Surveys for the Owned Real Property (the
"Surveys"), and containing a surveyor's certificate in compliance with ALTA/ASCM
land title survey requirements. Section 12.12 shall govern which party or
parties hereto shall bear the costs and expenses of the Title Commitment, the
Title Policy and the Surveys.
4.9 Termination of Hospitals' Employees. Upon the Effective Time, the
Hospitals' Employees (other than the Retained Management Employees) shall cease
to be employees of Seller and Seller's affiliates, and shall be removed from
such entities' respective payrolls. Seller shall terminate effective as of the
Effective Time the active participation of all of the Hospitals' Employees
(other than the Retained Management Employees) in all of the Seller Plans, and
shall cause each Seller Plan to comply with all applicable laws. After the
Effective Time, Seller shall timely make or cause to be made by Seller's
affiliates appropriate distributions to, or for the benefit of, all of the
Hospitals' Employees (other than the Retained Management Employees) in
37
respect of the Seller Plans which are in force and effect with respect to the
Hospitals' Employees (other than the Retained Management Employees) at the
Hospitals immediately prior to the Effective Time in accordance with ERISA, the
Code and the terms and conditions of the Seller Plans and subject to the
collective bargaining agreements of each Seller and/or each of Seller's
obligations under the National Labor Relations Act; provided, however, no such
distribution shall be required to the extent it is among the Assumed
Obligations. Seller shall provide Purchaser promptly following the Closing with
a schedule of the names and positions of all full-time employees of Seller with
respect to the operation of the Hospitals that have been terminated without
cause during the ninety (90) days immediately preceding the Effective Time.
4.10 Termination Cost Reports. Seller shall file on or before the date
due (but subject to any applicable extensions of time to file) all Medicare,
Medicaid, TRICARE, Blue Cross and any other termination cost reports required to
be filed as a result of the consummation of (a) the transfer of the Assets to
Purchaser and (b) the transactions contemplated by this Agreement. All such
termination cost reports shall be filed by Seller in a manner that is consistent
with current laws, rules and regulations. Seller will be solely responsible,
financially and otherwise, for the contents of all such termination cost reports
(and related claims and documentation). Without limiting the generality of the
foregoing, Seller will be solely obligated for all cost report deficiencies
related to periods prior to the Effective Time.
4.11 Xxxx-Xxxxx-Xxxxxx Act Filings. Seller will (a) take promptly all
actions necessary to make the filings required of Seller or Seller's affiliates
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR Act"), (b) comply at the earliest
practicable date with any request for additional information received by Seller
or Seller's affiliates from the Federal Trade Commission (the "FTC") or
Antitrust Division of the Department of Justice (the "DOJ") pursuant to the HSR
Act, and (c) cooperate with Purchaser in connection with Purchaser's filings
under the HSR Act and in connection with resolving any investigation or other
regulatory inquiry concerning the transactions contemplated by this Agreement
commenced by either the FTC or the DOJ. All fees and expenses of Seller incurred
in connection with Seller's filing under the HSR Act shall be borne by Seller.
4.12 Environmental Survey. Seller has obtained from an environmental
consulting firm (the "Consultant") and delivered to Purchaser a written
environmental survey of the Owned Real Property (the "Environmental Survey"),
which survey is identified on Exhibit 4.12 hereto. Prior to Closing, the
Environmental Survey shall be accompanied by a reliance letter from the
Consultant which permits Purchaser and Purchaser's designees (which designees
are reasonable under the circumstances of the transaction contemplated by this
Agreement) to rely on the Environmental Survey. Section 12.12 shall govern which
party or parties hereto shall bear the costs and expenses of the Environmental
Survey.
4.13 Noncompetition. As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, neither Seller
nor any of Seller's affiliates, shall, for a period of four (4) years following
the Closing Date, without the prior written consent of Purchaser, directly or
indirectly, invest in, own, manage, operate, control or participate in the
ownership, management, operation or control of, any Competing Business within
the Seller Business Service Area. For purposes of this Agreement, the term
"Competing Business" means
38
the business of providing healthcare goods or services, including hospitals and
outpatient surgical and diagnostic facilities; provided, however, the term
"Competing Business" shall exclude the activities of Broadlane, Inc., and the
term "Seller Business Service Area" means the area within a fifteen (15) mile
radius of any of the Acute Care Hospitals. Notwithstanding the foregoing, the
following shall be excluded from the foregoing provisions of this Section 4.13:
(a) the general acute care hospital activities of Seller and Seller's affiliates
as of the Closing Date (other than the activities of the Hospitals) and (b)
Seller's or any affiliate of Seller's acquisition and operation of a general
acute care hospital within the Seller Business Service Area after the Closing
Date so long as such hospital was acquired in a transaction in which the amount
of consideration allocated to such hospital is less than twenty percent (20%) of
the total consideration necessary to consummate such transaction. During the
period commencing on the Effective Date and ending on the first anniversary of
the Closing Date, Seller shall not actively solicit any of the Hospitals'
Employees (other than the Retained Management Employees) to remain or become an
employee of Seller; provided, however, that at any xxxx Xxxxxx may make a
general solicitation not directed specifically at Hospitals' Employees to
recruit employees through any means and shall have the right to hire Hospitals'
Employees who respond to such permitted solicitation efforts or seek such
employment unsolicited by Seller. After the Effective Time, Seller shall not,
and shall use its reasonable commercial efforts to cause its directors,
officers, employees and agents to not, use for any purpose any confidential
information which specifically relates to the Hospitals, other than (i) as
required for financial reporting purposes and (ii) as reasonably necessary in
connection with Seller's transition of the ownership and operation of the
Hospitals to Purchaser. Seller shall cause each of its affiliates to comply with
the obligations imposed by this Section 4.13. In the event that the provisions
contained in this Section 4.13 shall ever be deemed to exceed the time or
geographic limits or any other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum extent permitted by applicable law.
4.14 Enforceability. Seller hereby acknowledges that the restrictions
contained in Section 4.13 are reasonable and necessary to protect the legitimate
interests of Purchaser following the Closing Date. The parties also hereby
acknowledge and agree that any breach of Section 4.13 would result in
irreparable injury to Purchaser and that any remedy at law for any breach of
Section 4.13 would be inadequate. Notwithstanding any provision to the contrary
contained in this Agreement, the parties therefore agree, and Seller hereby
specifically consents that, without necessity of proof of actual damage,
Purchaser may be granted temporary or permanent injunctive relief, that
Purchaser shall be entitled to an equitable accounting of all earnings, profits
and other benefits arising from such breach, and that Purchaser shall be
entitled to recover its reasonable fees and expenses, including attorneys' fees,
incurred by Purchaser in enforcing the restrictions contained in Section 4.13.
4.15 Estoppels and Contract Consents. Seller will use reasonable
commercial good faith efforts to obtain, prior to the Closing Date, (a) estoppel
letters, in a form reasonably acceptable to Purchaser, under those Leases set
forth on Schedule 4.15 and (b) consents from third parties under all Material
Contracts and Material Leases which, by the terms of such Material Contract or
Material Lease, requires such consent. To the extent any of the consents
described in Section 4.15(b) are not obtained as of the Closing, Seller and
Purchaser shall use their reasonable commercial good faith efforts to mitigate
any costs, losses or damages associated with the failure to obtain such consents
prior to Closing. Notwithstanding the
39
foregoing, Seller's obtaining the estoppel letters described in Section 4.15(a)
and/or the consents described in Section 4.15(b) shall not be a condition
precedent to either party's obligation to close the transaction contemplated by
this Agreement.
4.16 Misdirected Payments. To the extent there are any misdirected funds
forwarded to Seller (or any of its subsidiaries) by any third parties, which
misdirected funds are paid in respect of the performance of services by or on
behalf of the Hospitals from and after the Effective Time, Seller shall remit
such misdirected funds to Purchaser within ten (10) business days after receipt
thereof, to the account(s) designated by Purchaser. Each of Seller and Purchaser
further agree that, to the extent that Purchaser has not obtained a provider
number with respect to a Hospital prior to the Effective Time, Purchaser (or a
subsidiary of Purchaser) shall be entitled to, subject to applicable law and the
terms of the applicable third party payor provider agreement, use the provider
number obtained by Seller prior to the Effective Time with respect to such
Hospital. Furthermore, Seller and Purchaser understand and agree that all
payments by third party payors in respect of such licensed provider numbers for
goods and services provided on and after the Effective Time ("Post-Closing
Payments") shall be solely for the account of Purchaser. Seller (on its behalf
and on behalf of its subsidiaries) hereby irrevocably assigns to Purchaser,
subject to applicable law, all right, title and interest it may have in respect
of such Post-Closing Payments and hereby agrees to remit to Purchaser such
Post-Closing Payments within ten (10) business days after its receipt thereof.
4.17 Supplements to Disclosure Schedule. From the Effective Date through
the Closing Date, Seller will promptly notify Purchaser if Seller becomes aware
of any fact or condition that causes or constitutes a breach of any of Seller's
representations and warranties as of the Effective Date. Should any such fact or
condition require any change in the Disclosure Schedule, Seller will promptly
deliver to Purchaser a supplement to the Disclosure Schedule specifying such
change.
4.18 Fallon Clinic Interest Repurchase. Seller will use reasonable
commercial good faith efforts to cause the Fallon Clinic, Inc. to, as of or
prior to the Closing Date, no longer own any equity interest in SVH.
Notwithstanding the foregoing, the Fallon Clinic, Inc. no longer owning any
equity interest in SVH as of or prior to the Closing Date shall not be a
condition precedent to either party's obligation to close the transaction
contemplated by this Agreement.
ARTICLE 5
COVENANTS OF PURCHASER
5.1 Purchaser's Efforts to Close. Purchaser shall use its reasonable
commercial efforts to satisfy all of the conditions precedent set forth in
Articles 6 and 7 to its or Seller's obligations under this Agreement to the
extent that Purchaser's action or inaction can control or influence the
satisfaction of such conditions.
5.2 Required Governmental Approvals. Between the date of this Agreement
and the Closing Date, Purchaser will: (a) use its reasonable commercial efforts
to obtain, as promptly as practicable, all material Governmental Authorizations
required of Purchaser to consummate the transactions contemplated hereby; (b)
provide such other information and communications to
40
Governmental Entities as such Governmental Entities may reasonably request; and
(c) cooperate with Seller in Seller's obtaining, as soon as practicable, all
material Governmental Authorizations required of Seller to consummate the
transactions contemplated hereby.
5.3 Certain Employee Matters.
(a) Purchaser covenants and agrees that, effective as of the
Effective Time, it shall make offers of employment (in substantially equivalent
positions) on an "at will" basis (subject to the terms of Sections 5.3(f)
through 5.3(l) to substantially all of the persons who are employees of (i)
Seller with respect to the operation of the Hospitals or (ii) any affiliate of
Seller which employs individuals at any of the Hospitals, (whether such
employees are full time employees, part-time employees, on short-term or
long-term disability or on leave of absence pursuant to Seller's policies, the
Family and Medical Leave Act of 1993 or other similar local law (such laws being
collectively referred to herein as the "FMLA")) as of the Effective Time (the
"Hospitals' Employees"); provided, however, that no Hospitals' Employee who is
on any disability or leave of absence at the Effective Time, other than leave of
absence pursuant to the FMLA or any other form of protected leave under local,
state or federal law including without limitation, workers' compensation leave
and leaves pursuant to or under the Uniform Services Employment and Reemployment
Rights Act, Americans with Disabilities Act, Massachusetts' Maternity Leave Act
and/or Massachusetts' Fair Employment Practices Act ("Employee on Disability"),
shall become a Hired Employee unless and until such Employee on Disability
reports back to work at the applicable Hospital on an active basis within ninety
(90) days after the Effective Time and, Purchaser shall have no liability or
obligation with respect to any Employee on Disability after the Effective Time
until such time as such Employee on Disability becomes a Hired Employee; and
provided, however, further, Purchaser shall not be required to make offers of
employment to the CEO, COO, CFO or CNO of any Hospital. Notwithstanding the
foregoing, Purchaser acknowledges that Seller has the right, but is not
required, to retain any management-level Hospitals' Employee who does not accept
Purchaser's employment offer made under this Section 5.3(a), which individuals
will remain employed by Seller or its applicable affiliate as of the Effective
Time (the "Retained Management Employees"). Any of the Hospitals' Employees who
accept an offer of employment with Purchaser as of or after the Effective Time
shall be referred to in this Agreement as the "Hired Employees". Purchaser
covenants and agrees that it shall continue to employ in comparable positions
the Hired Employees for a period of no less than ninety (90) calendar days
following the Effective Time, unless Purchaser sooner terminates the employment
of any Hired Employee for cause or any Hired Employee voluntarily resigns or
retires. Purchaser shall ensure that the terms and conditions of employment
(including initial position, cash compensation, shifts, benefits, including
without limitation health, dental, disability, life insurance and retirement
plans) of each of the Hired Employees on and after the Effective Time are
substantially equivalent to the benefits provided to Purchaser's employees at
similar hospital facilities in comparable positions or performing comparable
functions. Notwithstanding anything in this Section 5.3 or this Agreement to the
contrary, all offers of employment to employees (i) covered by any collective
bargaining agreement which is among the Assumed Obligations shall be subject to
the terms of and conditions of such assumed collective bargaining agreement and
(ii) shall be subject to the obligations of Purchaser set forth in Sections
5.3(f) through 5.3(l) inclusive.
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(b) Purchaser shall give all Hired Employees full credit for
extended sick pay (Reserve Sick) as reflected by the Sick Pay Amount as of the
Closing Date, and all other paid time off pay to the extent included in Net
Working Capital, either by (i) crediting such employees the time off reflected
in the employment records of Seller and/or any of its affiliates immediately
prior to the Effective Time or (ii) by making full payments to such employees of
the amounts which such employees would have received had they taken such paid
time off; provided, however, this Section 5.3(b)(ii) shall not be applicable to
the Sick Pay Amount as of the Closing Date.
(c) On and after the Effective Time, Hired Employees shall be
eligible for a medical and hospital plan sponsored by Purchaser. Hired Employees
shall be given credit for periods of employment with Seller and Seller's
affiliates, as applicable, prior to the Effective Time for purposes of
determining eligibility to participate and amount of benefits (including without
limitation vesting of benefits), and preexisting condition limitations will be
waived with respect to Hired Employees and their covered dependents unless such
preexisting condition limitations were applicable prior to the Effective Time.
In addition, if prior to the Effective Time a Hired Employee or his covered
dependents paid any amounts towards a deductible or out-of-pocket maximum in
Seller's or its affiliate's medical and health plan's current fiscal year, such
amounts shall be applied toward satisfaction of the deductible or out-of-pocket
maximum in the current fiscal year of Purchaser's medical and health plan that
covers Hired Employees on and after the Effective Time.
(d) Seller shall be responsible to provide continuation coverage
pursuant to the requirements of Code section 4980B and Part 6 of Title I of
ERISA ("COBRA Coverage") with respect to the Hospitals' Employees (and their
dependents) whose qualifying event occurred prior to the date on which such
Hospitals' Employees become Hired Employees. Purchaser shall be responsible to
provide COBRA Coverage with respect to each of the Hired Employees (and their
dependents) whose qualifying event occurs on or after the date on which such
Hospitals' Employees become Hired Employees.
(e) After the Effective Time, Purchaser's human resources department
will give reasonable assistance to Seller's and its affiliates' human resources
department with respect to Seller's and Seller's affiliates' post-Effective Time
administration of Seller's and Seller's affiliates' pre-Effective Time employee
pension benefit plans and employee health or welfare benefit plans for the
Hospitals' Employees (other than the Retained Management Employees). Within ten
(10) days after the Effective Time, Purchaser shall provide to Seller a list of
all the Hospitals' Employees who were offered employment by Purchaser but
refused such employment.
(f) Purchaser acknowledges that, pursuant to a Certification of
Representative issued by the National Labor Relations Board in Case Number
1-RC-20743, Massachusetts Nurses Association ("MNA") is the exclusive collective
bargaining representative of a bargaining unit of all full-time, regular
part-time and per diem registered nurses who work an average of four hours or
more per week employed by SVH in Worcester, Massachusetts. Purchaser
acknowledges that Saint Xxxxxxx Hospital and MNA are parties to a collective
bargaining agreement covering the above-described bargaining unit, a copy of
which has been provided to Purchaser. On and after the Effective Time, Purchaser
shall recognize MNA as the
42
exclusive collective bargaining representative within the same bargaining unit
at Saint Xxxxxxx Hospital (as more particularly described in the collective
bargaining agreement between Saint Xxxxxxx Hospital and MNA) as existed
immediately prior to the Effective Time and shall negotiate in good faith with
MNA to agreement or impasse before changing any term or condition of employment
that is in effect immediately prior to the Effective Time.
(g) Purchaser acknowledges that (i) a representation petition was
filed with the National Labor Relations Board by Local 1445, United Food and
Commercial Workers Union, AFL-CIO ("Local 1445"), in Case 1-RC-21117, in which
Local 1445 seeks to represent a bargaining unit of nonprofessional employees at
Saint Xxxxxxx Hospital, (ii) a representation election was conducted on February
27, 2004 pursuant to a Stipulated Election Agreement between Saint Xxxxxxx
Hospital, L.L.C. and Local 1445, and (iii) as of the Effective Date, the status
of Local 1445 as the exclusive collective bargaining representative of the
above-described bargaining unit is presently before the National Labor Relations
Board.
(h) Purchaser acknowledges that, pursuant to a Certification of
Representative issued by the National Labor Relations Board in Case Number
1-RC-17058, MNA is the exclusive collective bargaining representative of a
bargaining unit of registered nurses employed by MetroWest Medical Center at its
Natick, Massachusetts location ("MW Natick"). Purchaser acknowledges that
MetroWest Medical Center and MNA are parties to a collective bargaining
agreement covering the above-described bargaining unit at MW Natick, a copy of
which has been provided to Purchaser. On and after the Effective Time, Purchaser
(i) shall recognize MNA as the exclusive bargaining representative of the
above-described bargaining unit employees at MW Natick (as more specifically
identified in Article I of the collective bargaining agreement between MetroWest
Medical Center and MNA) and (ii) shall bargain in good faith with MNA regarding
any proposed changes of wages, hours, or terms and conditions of employment in
effect for applicable employees at MW Natick immediately prior to the Effective
Time.
(i) Purchaser acknowledges that International Union of Operating
Engineers, Xxxxx 000, XXX-XXX ("XXXX Xxxxx 000"), and International Brotherhood
of Electrical Workers, Local 103 ("IBEW, Local 103") jointly are the exclusive
collective bargaining representative of a bargaining unit of full-time and
regular part-time electricians (licensed and unlicensed), plumbers,
HVAC/Refrigeration mechanics, general services technicians, landscapers, and
parking and grounds attendants at both the Framingham Union and the Xxxxxxx
Xxxxx campuses of MetroWest Medical Center; and receivers/drivers and store
clerks at the Framingham Union campus of MetroWest Medical Center (as more
particularly described in the collective bargaining agreement between MetroWest
Medical Center, on the one hand, and IUOE Local 877 and IBEW Local 103, on the
other hand). Purchaser acknowledges that MetroWest Medical Center, IUOE Local
877 and IBEW Local 103 are parties to a collective bargaining agreement covering
the above-described bargaining unit, a copy of which has been provided to
Purchaser. On and after the Effective Time, Purchaser shall (i) comply with
Purchaser's obligations under the National Labor Relations Act or other
applicable law to recognize IUOE Local 877 and IBEW Local 103 as the exclusive
bargaining representative of the employees in such collective bargaining unit
and (ii) comply with Purchaser's obligations under the National Labor Relations
Act to bargain in good faith regarding any proposed changes of wages, hours, or
terms and conditions of employment with respect to the applicable employees at
MetroWest Medical Center.
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(j) Purchaser acknowledges that Service Employees International
Union Local 285, AFL-CIO, CLC ("SEIU Local 285"), is the exclusive collective
bargaining representative of a bargaining unit of all full-time and regular
part-time hourly paid employees employed by MetroWest Medical Center at its
Framingham, Massachusetts campus, in the food and nutrition, environmental
services, central supply, and linen supply departments; and also all employees
in the job classification of utility aides, nursing aides, operating room aides,
emergency room aides, laboratory aides, and transportation aides. Purchaser
acknowledges that MetroWest Medical Center and SEIU Local 285 are parties to a
collective bargaining agreement covering the above-described bargaining unit, a
copy of which has been provided to Purchaser. On or before the Effective Time,
Purchaser shall recognize SEIU Local 285 as the exclusive collective bargaining
representative of the bargaining unit employees covered by the collective
bargaining agreement between MetroWest Medical Center and SEIU Local 285 and
Purchaser shall assume and abide by such collective bargaining agreement.
(k) Prior to the Effective Time, MetroWest Medical Center and Saint
Xxxxxxx Hospital may take any and all action necessary to comply with their
respective obligations under the above-described collective bargaining
agreements and/or the provisions of the National Labor Relations Board and/or
Labor Management Relations Act as a result of the consummation of the
transactions contemplated by this Agreement to bargain in good faith with the
labor organizations described above. Without limitation, prior to the Effective
Time, MetroWest Medical Center and Saint Xxxxxxx Hospital may notify such labor
organizations of the sale and provide such labor organizations with information
concerning Purchaser (e.g., legal name, address and contact person) and
information concerning the sale, including without limitation a copy of this
Agreement.
(l) On and after the Effective Time, Purchaser shall take any and
all action that may be necessary to comply with the provisions of the National
Labor Relations Act and/or the Labor Management Relations Act as a result of the
consummation of the transactions contemplated by this Agreement, including
without limitation obligations thereunder to bargain in good faith with respect
to the terms and conditions of employment of the Hired Employees represented by
any labor organization described above or covered by the labor union agreements
or collective bargaining agreements described above and/or included in Schedule
2.13(b).
5.4 Use of Business Names. Purchaser covenants that it and its affiliates
shall not use in their respective trades or businesses the names "Xxxxx
Healthcare Corporation", "Xxxxx", "Xxxxx HealthSystem", "OrNda HealthCorp", and
any other names or symbols not used exclusively at any of the Hospitals prior to
the Effective Time, any abbreviations or variations thereof or service marks,
symbols or logos related thereto, nor any promotional material, stationery,
supplies or other items of inventory bearing either such names, symbols or
abbreviations or variations thereof.
5.5 Excluded Assets. As soon as practicable after the Closing Date,
Purchaser shall deliver to Seller or Seller's designee any Excluded Assets found
at any of the Hospitals on and after the Effective Time, without imposing any
charge on Seller for Purchaser's storage or holding of same on and after the
Effective Time.
44
5.6 Confidentiality. Purchaser shall, and shall cause its employees,
representatives and agents to, hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of Purchaser's
counsel, by other requirements of law, all Confidential Information (as
hereinafter defined), and Purchaser shall not disclose the Confidential
Information to any Person, except as otherwise may be reasonably necessary to
carry out the transactions contemplated by this Agreement, including any
business or diligence review by or on behalf of Purchaser. Purchaser's
obligations set forth in the immediately preceding sentence of this Section 5.6
and in the last sentence of this Section 5.6 shall apply (a) between the
Effective Date and the Effective Time with respect to Confidential Information
which is among the Assets and (b) from and after the Effective Date for all
Confidential Information which is not described in subsection (a) above. For the
purposes hereof, "Confidential Information" shall mean all information of any
kind concerning Seller or the business of the Hospitals, in connection with the
transactions contemplated by this Agreement except information (i) ascertainable
or obtained from public or published information, (ii) received from a third
party not known by Purchaser to be under an obligation to Seller or any
affiliate of Seller to keep such information confidential, (iii) which is or
becomes known to the public (other than through a breach of this Agreement), or
(iv) which was in Purchaser's possession prior to disclosure thereof to
Purchaser in connection herewith. Subject to the second sentence of this Section
5.6, the rights of Seller under this Section 5.6 shall be in addition to and not
in substitution for the rights of Seller and Seller's affiliates under that
certain Confidentiality Agreement between THC and Vanguard dated February 5,
2004 (the "Confidentiality Agreement"), which Confidentiality Agreement shall
survive the Closing.
5.7 Enforceability. Purchaser hereby acknowledges that the restrictions
contained in Section 5.6 above are reasonable and necessary to protect the
legitimate interests of Seller. The parties also hereby acknowledge and agree
that any breach of Section 5.6 would result in irreparable injury to Seller and
that any remedy at law for any breach of Section 5.6 would be inadequate.
Notwithstanding any provision to the contrary contained in this Agreement, the
parties therefore agree, and Purchaser hereby specifically consents that,
without necessity of proof of actual damage, Seller may be granted temporary or
permanent injunctive relief, that Seller shall be entitled to an equitable
accounting of all earnings, profits and other benefits arising from such breach,
and that Seller shall be entitled to recover its reasonable fees and expenses,
including attorneys' fees, incurred by Seller in enforcing the restrictions
contained in Section 5.6.
5.8 Xxxx-Xxxxx-Xxxxxx Act Filings. Purchaser shall (a) take promptly all
actions necessary to make the filings required of Purchaser or its affiliates
under the HSR Act, (b) comply at the earliest practicable date with any request
for additional information received by Purchaser or its affiliates from the FTC
or the DOJ pursuant to the HSR Act, and (c) cooperate with Seller in connection
with Seller's or Seller's affiliates' filings under the HSR Act and in
connection with resolving any investigation or other regulatory inquiry
concerning the transactions contemplated by this Agreement commenced by either
the FTC or the DOJ. All filing fees imposed in connection with Purchaser's
filings under the HSR Act shall be borne by Purchaser.
5.9 Waiver of Bulk Sales Law Compliance. Purchaser hereby waives
compliance by Seller with the requirements, if any, of Article 6 of the Uniform
Commercial Code as in force in
45
any state in which the Assets are located and all other similar laws applicable
to bulk sales and transfers.
5.10 Tax-Deferred Exchange. Seller may effect one or more tax-deferred
exchanges under Internal Revenue Code Section 1031 in respect of the Real
Property (or a portion thereof). Purchaser agrees to accommodate Seller in
effecting any such tax-deferred exchange. Seller shall have the right to elect
such tax-deferred exchange at any time before the Closing Date. Seller and
Purchaser agree, however, that consummation of the purchase and sale of the Real
Property under this Agreement is not conditioned on such exchange. If Seller
elects to make a tax-deferred exchange, Purchaser agrees to timely execute such
additional escrow instructions, deeds, documents, agreements, or instruments to
effect such exchange, and Purchaser acknowledges that time is of the essence in
respect of Purchaser's cooperation hereunder, provided that Purchaser shall
incur no additional costs, expenses, or liabilities in this transaction as a
result of or in connection with such exchange.
5.11 Indigent and Low Income Care. From and after the Effective Time, with
respect to the operation of the Hospitals, Purchaser shall adhere to and comply
with its then existing policies (as in effect with respect to Purchaser's other
hospitals) regarding indigent and charity care, as such policies may be amended
or supplemented from time to time.
5.12 Medical Staff. To ensure continuity of care in the community,
Purchaser agrees that each Hospital's medical staff members in good standing as
of the Effective Time shall maintain medical staff privileges at each such
Hospital as of the Effective Time. On and after the Effective Time, the medical
staff will be subject to each Hospital's Medical Staff Bylaws then in effect, as
amended from time to time in accordance with the terms thereof.
5.13 Local Governing Board. As soon as reasonably practicable after the
Effective Time (but no later than the time period required by applicable law),
Purchaser shall form a local governing board at each of the Hospitals in
accordance with the terms of this Section 5.13. Such local governing board shall
be an advisory committee of the board of directors of Purchaser comprised of
medical staff members, community leaders and each Hospital's Chief Executive
Officer. The local governing board shall be subject to the authority of
Purchaser's board of directors and the terms of Purchaser's Articles of
Incorporation, Bylaws and other organizational documents.
5.14 Community Benefit and Prior Owner Obligations. On and after the
Effective Time, Purchaser shall assume the obligations to operate the applicable
Hospitals in accordance with the terms set forth in Schedule 5.14, which
Schedule shall include, without limitation, commitments which Seller made to
prior owners of the Hospitals and other commitments which benefit the community.
5.15 Subsequent Sale. At any time after the Effective Time, if Purchaser
decides to sell, merge, or otherwise transfer or consolidate any of the
Hospitals during a period when Purchaser is performing any operating covenants
pursuant to Section 5.14, Purchaser shall ensure that (a) such subsequent owner
of the applicable Hospital agrees to fulfill Purchaser's obligations under
Section 5.14 and (b) all succeeding subsequent owners agree to fulfill such
obligations under Section 5.14 (but only for so long as such obligations
continue in effect).
46
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Seller's obligation to sell the Assets and to close the transactions as
contemplated by this Agreement shall be subject to the satisfaction of each of
the following conditions on or prior to the Closing Date unless specifically
waived in writing by Seller in whole or in part at or prior to the Closing:
6.1 Signing and Delivery of Instruments. Purchaser shall have executed and
delivered all documents, instruments and certificates required to be executed
and delivered pursuant to the provisions of this Agreement. Purchaser
acknowledges that Purchaser shall not satisfy the condition precedent set forth
in this Section 6.1 (as it relates to the delivery of the amount set forth in
Section 1.7.1) unless Purchaser initiates the wire transfer of the amount set
forth in Section 1.7.1 to Seller, and provides to Seller a Federal Reserve wire
reference number with respect thereto, on or before 5:00 p.m. (Pacific time) on
the Closing Date.
6.2 Unfavorable Action or Proceeding. On the Closing Date, no orders,
decrees, judgments or injunctions of any court or governmental body shall be in
effect, and no claims, actions, suits, proceedings, arbitrations or
investigations shall be pending or threatened, which challenge or seek to
challenge, or which could prevent or cause the rescission of, the consummation
of the transactions contemplated in this Agreement.
6.3 Performance of Covenants. Purchaser shall have in all respects
performed or complied with each and all of the obligations, covenants,
agreements and conditions required to be performed or complied with by it on or
prior to the Closing Date; provided, however, this condition will be deemed to
be satisfied unless Purchaser was given written notice of such failure to
perform or comply and did not or could not cure such failure to perform or
comply within fifteen (15) business days after receipt of such notice.
6.4 Opinion of Counsel for Purchaser. Seller shall have received the
favorable opinion of Purchaser's in-house counsel, dated the Closing Date, in
substantially the form set forth in Exhibit 6.4 attached to this Agreement.
6.5 Xxxx-Xxxxx-Xxxxxx Filings. All filings required to be made and notices
required to be given pursuant to the HSR Act shall have been made, all approvals
or consents required thereby shall have been obtained and the waiting periods
required thereby, if any, shall have expired or terminated.
6.6 Governmental Authorizations. The parties shall have obtained all
material licenses, permits, determinations of need and authorizations from
governmental agencies or governmental bodies that are necessary or required for
completion of the transactions contemplated by this Agreement including
reasonable assurances that any material licenses, permits, determinations of
need and authorizations not actually issued as of the Closing will be issued
following Closing (which may include oral assurances from appropriate
governmental agencies or bodies).
47
6.7 Supplemental Schedules; Exhibits. Seller shall have determined, in its
reasonable discretion, that the updated and/or supplemented matters set forth in
the Disapproved Schedules are not material. The form and substance of each of
the exhibits which are not attached hereto as of the Effective Date shall be
acceptable to Seller in its reasonable discretion.
6.8 Warranties True and Correct. The representations and warranties made
by Purchaser and set forth in this Agreement and in the schedules attached
hereto shall be true and correct in all material respects when made and as of
the Closing Date.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
Purchaser's obligation to purchase the Assets and to close the
transactions contemplated by this Agreement shall be subject to the satisfaction
of each of the following conditions on or prior to the Closing Date unless
specifically waived in writing by Purchaser in whole or in part at or prior to
the Closing.
7.1 Governmental Authorizations. The parties shall have obtained all
material licenses, permits, determinations of need and authorizations (but not
provider numbers, which are governed by the second sentence of this Section 7.1)
from governmental agencies or governmental bodies that are necessary or required
for completion of the transactions contemplated by this Agreement including
reasonable assurances that any material licenses, permits, determinations of
need and authorizations (but not provider numbers) not actually issued as of the
Closing will be issued following Closing (which may include oral assurances from
appropriate governmental agencies or bodies). Purchaser shall have obtained
reasonable assurances that it will be issued Medicare and Medicaid provider
numbers at Closing or within a reasonable period of time following Closing
(which may include oral assurances from appropriate governmental agencies or
bodies). Any conditions to the issuance of the determinations of need shall be
reasonably satisfactory to Purchaser.
7.2 Signing and Delivery of Instruments. Seller shall have executed and
delivered all documents, instruments and certificates required to be executed
and delivered pursuant to all of the provisions of this Agreement.
7.3 Performance of Covenants. Seller shall have in all material respects
performed or complied with each and all of the obligations, covenants,
agreements and conditions required to be performed or complied with by Seller on
or prior to the Closing Date; provided, however, this condition will be deemed
to be satisfied unless Seller was given written notice of such failure to
perform or comply and did not or could not cure such failure to perform or
comply within fifteen (15) business days after receipt of such notice.
7.4 Unfavorable Action or Proceeding. On the Closing Date, no orders,
decrees, judgments or injunctions of any court or governmental body shall be in
effect, and no claims, actions, suits, proceedings, arbitrations or
investigations shall be pending or threatened, which challenge or seek to
challenge, or which could prevent or cause the rescission of, the consummation
of the transactions contemplated in this Agreement.
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7.5 Xxxx-Xxxxx-Xxxxxx Filings. All filings required to be made and notices
required to be given pursuant to the HSR Act shall have been made, all approvals
or consents required thereby shall have been obtained and the waiting periods
required thereby, if any, shall have expired or terminated.
7.6 Opinion of Counsel. Purchaser shall have received the favorable
opinion of Seller's in-house counsel dated the Closing Date, in substantially
the form attached hereto as Exhibit 7.6.
7.7 Title Insurance Policy. Purchaser shall have received a fully
effective Title Policy issued to Purchaser by the Title Company covering the
Owned Real Property and any ground lease specified on Schedule 4.8 in the amount
of the full insurable value of the Owned Real Property and any such ground
lease, respectively (which amount shall be as mutually agreed by Seller and
Purchaser prior to Closing). The Title Policy shall show fee simple title to the
Owned Real Property vested in Purchaser, and valid leasehold title to the Leased
Real Property which is subject to any ground lease specified on Schedule 4.8,
subject only to: (a) current real estate taxes not yet due and payable; and (b)
the permitted title exceptions listed in Schedule 7.7 hereto (the "Permitted
Exceptions"). The Title Policy shall have all standard and general exceptions
deleted so as to afford full "extended form coverage".
7.8 Warranties True and Correct. The representations and warranties made
by Seller and set forth in this Agreement and in the schedules attached hereto
shall be true and correct in all material respects (except to the extent limited
or qualified by materiality or material adverse effect, in which event such
applicable representation and warranty shall be true and accurate in all
respects in accordance with the terms of the applicable representation and
warranty) when made and as of the Closing Date, except where the failure of the
representations and warranties to be true and correct in all material respects
(except to the extent limited or qualified by materiality or material adverse
effect, in which event such applicable representation and warranty shall be true
and accurate in all respects in accordance with the terms of the applicable
representation and warranty) would not have a material adverse effect on the
business (but not the prospects), assets, financial condition or operation of
the Hospitals taken as a whole. For purposes of this Section 7.8, the truth and
correctness of the representations and warranties shall be construed as if
Seller never provided Purchaser any supplement to the Disclosure Schedule
pursuant to Section 4.17.
7.9 Exhibits. The form and substance of each of the exhibits which are not
attached hereto as of the Effective Date shall be acceptable to Purchaser in its
reasonable discretion.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to
Closing:
(a) by the mutual written consent of the parties;
(b) by Seller if a material breach of this Agreement has been
committed by Purchaser and such breach has not been (i) waived in writing by
Seller or (ii) cured by Purchaser
49
to the reasonable satisfaction of Seller within fifteen (15) business days after
service by Seller upon Purchaser of a written notice which describes the nature
of such breach;
(c) by Purchaser if a material breach of this Agreement has been
committed by Seller and such breach has not been (i) waived in writing by
Purchaser or (ii) cured by Seller to the reasonable satisfaction of Purchaser
within fifteen (15) business days after service by Purchaser upon Seller of a
written notice which describes the nature of such breach;
(d) by Purchaser if any of the conditions in Article 7 have not been
satisfied as of the Closing Date or if satisfaction of any condition in Article
7 is or becomes impossible and Purchaser has not waived such condition in
writing on or before the Closing Date (provided that the failure to satisfy the
applicable condition or conditions has occurred by reason other than (i) through
the failure of Purchaser to comply with its obligations under this Agreement or
(ii) Seller's failure to provide its closing deliveries on the Closing Date as a
result of Purchaser not being ready, willing and able to close the transaction
on the Closing Date);
(e) by Seller if any of the conditions in Article 6 have not been
satisfied as of the Closing Date or if satisfaction of any such condition in
Article 6 is or becomes impossible and Seller has not waived such condition in
writing on or before the Closing Date (provided that the failure to satisfy the
applicable condition or conditions has occurred by reason other than (i) through
the failure of Seller to comply with its obligations under this Agreement or
(ii) Purchaser's failure to provide its closing deliveries on the Closing Date
as a result of Seller not being ready, willing and able to close the transaction
on the Closing Date);
(f) by Purchaser, upon the delivery of a Casualty Termination Notice
to Seller in accordance with Section 1.14;
(g) by either Purchaser or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply in all material respects with its obligations under this Agreement) on
or before December 31, 2004 (the "Termination Date") (Notwithstanding any
provision to the contrary contained in this Agreement, no provision of this
Agreement shall be interpreted to permit or otherwise allow the Termination Date
to be extended to a date which is subsequent to December 31, 2004.);
(h) by Seller or Purchaser if Fallon Foundation, Inc. exercises its
rights of first refusal under the Fallon Purchase Agreement; or
(i) by Purchaser, if, since August 31, 2004, there has occurred any
event, change or development that has had a "material adverse effect" on the
assets, financial condition, or operations of the Hospitals taken as a whole;
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, the following will be presumed not to give rise to a "material
adverse effect": (a) changes or proposed changes to any law, reimbursement rates
or policies of governmental agencies or bodies that are generally applicable to
hospitals or healthcare facilities to the extent such changes or proposed
changes do not disproportionately affect the Hospitals (as compared to other
hospitals or healthcare facilities), (b) requirements, reimbursement rates,
policies or procedures of third party payors or accreditation commissions or
organizations that are generally applicable to hospitals or healthcare
facilities or (c) changes in
50
the financial or operating performance of the Hospitals which are attributable
to (i) seasonal changes or (ii) the announcement of Purchaser as the proposed
acquirer of the Hospitals (the definition of the term, "material adverse
effect", as set forth in this Section 8.1(i), shall be used solely for
determining Purchaser's termination right under this Section 8.1(i) and not for
interpreting the phrase "material adverse effect" for any other usage in this
Agreement).
8.2 Termination Consequences. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate, except that the obligations in Sections 5.6, 8.2, 12.3, 12.8, and
12.12 shall survive. In the event of a termination of this Agreement pursuant to
Section 8.1(a) or 8.1(d) through 8.1(g) hereof, (a) each party shall pay the
costs and expenses incurred by it in connection with this Agreement, except as
provided in Section 12.12, and (b) no party shall be liable to any other party
for any costs, expenses, damage or loss of anticipated profits or Consequential
Damages hereunder. In the event of a termination of this Agreement pursuant to
Section 8.1(b) or Section 8.1(c), then the parties shall have the right to
pursue all remedies available at law or in equity, provided that no party shall
be entitled to obtain Consequential Damages.
ARTICLE 9
POST-CLOSING MATTERS
9.1 Excluded Assets and Excluded Liabilities. Subject to Section 11.2
hereof, any asset (including Accounts Receivable) or any liability, all other
remittances and all mail and other communications that is an Excluded Asset or
an Excluded Liability (a) pursuant to the terms of this Agreement, (b) as
otherwise determined by the parties' mutual written agreement or (c) absent such
agreement, as determined by adjudication by a court or similar tribunal, and
which comes into the possession, custody or control of Purchaser (or its
respective successors-in-interest, assigns or affiliates) shall within ten (10)
business days following receipt be transferred, assigned or conveyed by
Purchaser (and its respective successors-in-interest, assigns and affiliates) to
Seller at Seller's cost. Until such transfer, assignment and conveyance,
Purchaser (and its respective successors-in-interest, assigns and affiliates)
shall not have any right, title or interest in or obligation or responsibility
with respect to such asset or liability except that Purchaser shall hold such
asset in trust for the benefit of Seller. Purchaser (and its respective
successors-in-interest, assigns and affiliates) shall have neither the right to
offset amounts payable to Seller under this Section 9.1 against, nor the right
to contest its obligation to transfer, assign and convey to Seller because of,
outstanding claims, liabilities or obligations asserted by Purchaser against
Seller including but not limited to pursuant to the post-Closing Cash Purchase
Price adjustment of Section 1.4 and the indemnification provisions of Section
10.2. With respect to payment received by Purchaser on account of Transition
Services, this Section 9.1 shall be subject to the provisions of Section 11.3.
The terms of this Article 9 shall not be subject to the time limitations
contained in Section 10.1 of this Agreement.
9.2 Preservation and Access to Records After the Closing.
(a) From the Closing Date until seven (7) years after the Closing
Date or such longer period as required by law (the "Document Retention Period"),
Purchaser shall keep and preserve in the ordinary course of business all medical
records, patient records, medical staff
51
records and other books and records which are among the Assets as of the
Effective Time, but excluding any records which are among the Excluded Assets.
Purchaser will afford to the representatives of Seller, including its counsel
and accountants, full and complete access to, and copies (including, without
limitation, color laser copies) of, such records with respect to time periods
prior to the Effective Time (including, without limitation, access to records of
patients treated at the Hospitals prior to the Effective Time) on reasonable
prior notice during normal business hours after the Effective Time, to the
extent reasonably needed by Seller or Seller's affiliates for business purposes.
Purchaser acknowledges that, as a result of entering into this Agreement and
operating the Hospitals, it will gain access to patient records and other
information which are subject to rules and regulations concerning
confidentiality. Purchaser shall abide by any such rules and regulations
relating to the confidential information it acquires. Purchaser shall maintain
the patient and medical staff records at the Hospitals in accordance with
applicable law and the requirements of relevant insurance carriers. After the
expiration of the Document Retention Period, if Purchaser intends to destroy or
otherwise dispose of any of the documents described in this Section 9.2(a),
Purchaser shall provide written notice to Seller of Purchaser's intention no
later than forty-five (45) calendar days prior to the date of such intended
destruction or disposal. Seller shall have the right, at its sole cost, to take
possession of such documents during such forty-five (45) calendar day period. If
Seller does not take possession of such documents during such forty-five (45)
calendar day period, Purchaser shall be free to destroy or otherwise dispose of
such documentation upon the expiration of such forty-five (45) calendar day
period.
(b) Purchaser shall give reasonable cooperation to Seller, Seller's
affiliates and their insurance carriers in respect of the defense of claims by
third parties against Seller or any affiliate of Seller, in respect of events
occurring prior to the Effective Time with respect to the operation of the
Hospitals. Such cooperation shall include, without limitation, making the Hired
Employees reasonably available for interviews, depositions, hearings and trials.
Such cooperation shall also include making all of its employees available to
assist in the securing and giving of evidence and in obtaining the presence and
cooperation of witnesses (all of which shall be done without payment of any fees
or expenses to Purchaser or to such employees other than out-of-pocket
expenses). In addition, with reasonable prior notice, Seller and Seller's
affiliates shall be entitled to remove from the Hospitals originals of any such
records, but only for purposes of pending litigation involving the Persons to
whom such records refer, as certified in writing prior to removal by counsel
retained by Seller or any of Seller's affiliates in connection with such
litigation. Such records shall be, at Purchaser's option either (i) copied by
Purchaser for Seller at Seller's expense or (ii) removed from the premises by
Seller, copied by Seller and promptly returned to Purchaser unless the originals
of such records must be introduced into evidence in which case Seller shall
return them as soon as practicable.
(c) In connection with (i) the transition of the Hospitals pursuant
to the transaction contemplated by this Agreement, (ii) Seller's rights to the
Excluded Assets, (iii) Seller's obligations under the Excluded Liabilities and
(iv) Seller's preparation of the Final Balance Sheets pursuant to Section 1.4,
Purchaser shall after the Effective Time give Seller, Seller's affiliates and
their respective representatives reasonable access during normal business hours
to Purchaser's books, accounts and records and all other relevant documents and
information with respect to the assets, liabilities and business of the
Hospitals as representatives of Seller and Seller's affiliates may from time to
time reasonably request, all in such manner as
52
not to unreasonably interfere with the operations of the Hospitals. Seller
acknowledges that it shall coordinate its activities contemplated by this
Section 9.2(c) through the Chief Executive Officer of the applicable Hospital,
or his designee.
(d) Purchaser and its representatives shall be given access by
Seller during normal business hours to the extent reasonably needed by Purchaser
for business purposes to all documents, records, correspondence, work papers and
other documents retained by Seller pertaining to any of the Assets or with
respect to the operation of the Hospitals prior to the Effective Time, all in
such manner as to not interfere unreasonably with Seller's business. Such
documents and other materials shall be, at Seller's option, either (i) copied by
Seller for Purchaser at Purchaser's expense, or (ii) removed by Purchaser from
the premises, copied by Purchaser and promptly returned to Seller.
(e) Purchaser shall cooperate with Seller, on a timely basis and as
reasonably requested by Seller, in connection with the provision of all data of
the Hospitals and other information required by Seller for reporting to the
JCAHO for the remainder of the quarterly period in which the Closing has
occurred.
(f) For five (5) years after the Closing Date, Seller will provide
Purchaser, within thirty (30) days of any request, with an updated claims
history of professional liability, general liability and workers' compensation
claims made against Seller with respect to the operation of the Hospitals prior
to the Effective Time.
(g) To the maximum extent permitted by law, if any Person requests
or demands, by subpoena or otherwise, any documents relating to the Excluded
Liabilities, including without limitation, documents relating to the operations
of any of the Hospitals or any of the Hospitals' committees prior to the
Effective Time, prior to any disclosure of such documents, Purchaser shall
notify Seller and shall provide Seller with the opportunity to object to, and
otherwise coordinate with respect to, such request or demand.
9.3 Provision of Benefits of Certain Contracts. If, as of the Effective
Time, Purchaser or Seller is unable to obtain any consent to the assignment of
Seller's interest in a Material Contract or a Material Lease, or if Purchaser is
unable to enter into a new contract with respect to an Excluded Multi-Facility
Contract, until such consent or new contract is obtained, Seller shall use
reasonable commercial efforts to provide Purchaser the benefits of any such
Material Contract or Material Lease and the applicable Hospital's portion of any
Excluded Multi-Facility Contract, cooperate in any reasonable and lawful
arrangement designed to provide such benefits to Purchaser, and allow Purchaser
to directly enforce such Material Contract or Material Lease against the
applicable third parties thereto. Purchaser shall use reasonable commercial
efforts to perform, on behalf of Seller, the obligations of Seller thereunder or
in connection therewith arising on and after the Effective Time, but only to the
extent that such action would not result in a material default thereunder or in
connection therewith and such obligation would have been, in the case of an
Excluded Multi-Facility Contract, an obligation of Purchaser had it entered into
a new contract on substantially similar terms.
9.4 Closing of Financials. With respect to any Hospital in which the CFO
(to the extent such position was filled by an employee of Seller or an affiliate
of Seller immediately
53
prior to the Closing Date) is among the Hired Employees, Purchaser shall cause
each such CFO to complete the standardized closing of Seller's financial records
through the Closing Date including, without limitation, the closing of general
ledger account reconciliations (collectively, the "Closing of Financials").
Purchaser shall cause each such CFO to use his or her good faith efforts to
complete the Closing of Financials by no later than the date which is thirty
(30) days after the Closing Date. Seller shall reimburse Purchaser for all
payroll charges and other out-of-pocket expenses of Purchaser associated with
the time which each such CFO devotes to the Closing of Financials. Such
reimbursement shall occur no later than the date which is thirty (30) days after
Purchaser provides a written statement to Seller which details such charges and
expenses. Seller shall hold Purchaser harmless for any errors which are made by
each such CFO during the course of the Closing of Financials, provided that such
errors are not the result of gross negligence, fraud or intentional misconduct.
9.5 Accounts Receivable Contact Person. After the Closing Date, Seller
shall provide Purchaser with the name and contact information of a
representative of Seller who shall be available during regular business hours
to, with respect to the Accounts Receivable, (a) answer questions of payors or
patients and (b) work with such payors or patients in the resolution of
disputes. Purchaser shall be permitted to provide such contact information to
payors or patients who have any such questions or have disputes related to the
Accounts Receivable.
9.6 Audited Statements and Other Financial Statements Cooperation. Seller
shall cooperate with Purchaser in Purchaser's efforts to obtain KPMG's consent,
as may be required, in order for Purchaser to include the Audited Statements
and/or the Other Financial Statements, if any, in any registration statement or
filing under the Exchange Act or the Securities Act of 1933, as amended.
9.7 UCC Termination Statements. If, at Closing, Seller is unable to
deliver to Purchaser any UCC termination statements for any and all financing
statements (which do not correspond to a Permitted Exception or an agreement
which is among the Assumed Obligations) filed with respect to the Assets, Seller
shall use its reasonable best efforts (which reasonable best efforts shall
include Seller's obligation to pay the face amount of any applicable outstanding
lien or encumbrance) to deliver such UCC termination statements to Purchaser as
soon as practicable after the Closing.
9.8 Employee Transition. Purchaser acknowledges that Seller will, on the
Closing Date, provide each of the Hospitals' Employees a payroll check (with
respect to ordinary wages and salaries) covering all pay periods through the
Closing Date, which check will include an amount based upon an estimate of time
worked through the Closing Date (the "Estimated Payment Amount"). Within ten
(10) days after the Closing Date, Seller shall deliver to Purchaser a statement
setting forth, in reasonable detail, (a) the Estimated Payment Amount, if any,
for each of the Hospitals' Employees and (b) for each of the Hospitals'
Employees who are among the Hired Employees the amount of pay, if any, which is
due to such Hired Employees based on the actual time worked by each such
employee during the applicable payroll cycle ending on the Closing Date, less
the Estimated Payment Amount which Seller made to each such employee on the
Closing Date (the "Employee Settle-Up Payments). Within twenty (20) days after
the Closing Date, Seller shall reimburse Purchaser the amount of the Employee
Settle-Up Payments. As soon as practicable after the Closing Date (but in no
event later than the date
54
which is thirty (30) days after the Closing Date), Purchaser shall include the
Employee Settle-Up Payments in the payroll check for each of the applicable
Hired Employees.
ARTICLE 10
SURVIVAL AND INDEMNIFICATION
10.1 Survival. Except as expressly set forth in this Agreement to the
contrary, all representations and warranties of Purchaser and Seller,
respectively, contained in Articles 2 and 3 of this Agreement or in any document
delivered pursuant hereto shall be deemed to be material and to have been relied
upon by Purchaser and Seller, respectively, and shall continue to be fully
effective and enforceable following the Closing Date for two years and shall
thereafter be of no further force and effect. Notwithstanding the foregoing, the
representations and warranties set forth in Sections 2.6 and 2.16 shall continue
to be fully effective and enforceable following the Closing Date for the
applicable statute of limitations periods, plus 30 days, and the indemnification
provisions contained in Sections 10.2.1(b) through 10.2.1(j) and Sections
10.3.1(b) through 10.3.1(i) shall continue to be fully effective and enforceable
following the Closing Date until the expiration of any applicable statute of
limitations period, or, if none, without any time limitation; provided, however,
that if there is an outstanding notice of a claim at the end of any such
applicable period in compliance with the terms of Section 10.4, such applicable
period shall not end in respect of such claim until such claim is resolved. All
covenants of Purchaser and Seller herein shall survive Closing in accordance
with their terms.
10.2 Indemnification of Purchaser by Seller.
10.2.1 Indemnification. Each Seller, for itself and its successors,
shall jointly and severally keep and save Purchaser, and its affiliates and
their respective directors, officers, employees, agents and other
representatives (the "Purchaser Group"), forever harmless from and shall
indemnify and defend the Purchaser Group against any and all obligations,
judgments, liabilities, interest, penalties, violations, actions, suits,
proceedings, fees, fines, claims, losses, costs, demands, damages, liens,
encumbrances and expenses including reasonable attorneys' fees and court costs
(collectively, "Damages"), to the extent connected with or arising or resulting
from (a) any breach of any representation or warranty of Seller under this
Agreement, without giving effect to any Disapproved Schedules, (b) any breach or
default by Seller of any covenant or agreement of Seller under this Agreement,
(c) the Excluded Liabilities, (d) the Excluded Assets, (e) all Taxes for any
period ending on or prior to the Effective Time relating to Seller or the
Assets, other than any Taxes which (i) are among the Assumed Obligations or (ii)
which have been prorated pursuant to Section 1.8 ("Seller Tax Claims"), (f) any
professional liability claim arising out of the business operations of the
Hospitals prior to the Effective Time, (g) any act, conduct or omission of
Seller that has accrued, arisen, occurred or come into existence at any time
prior to the Effective Time, (h) any of those certain pending governmental
investigations which are described on Schedule 10.2.1, (i) Purchaser's
participation in any tax-deferred exchange pursuant to Section 5.10 and (j) cost
reports (and all claims with respect thereto) relating to Seller with respect to
the Medicare, Medicaid, TRICARE or Blue Cross programs or any other third-party
payor for all periods prior to the Effective Time. Seller's obligations under
this Section 10.2.1 shall remain subject to, and shall be limited by, the
provisions contained in Section 1.13. No provision in this Agreement shall
prevent Seller from pursuing any of its legal
55
rights or remedies that may be granted to Seller by law against any Person other
than any other member of the Purchaser Group.
10.2.2 Indemnification Limitations. (a) Notwithstanding any
provision to the contrary contained in this Agreement, Seller shall be under no
liability to indemnify the Purchaser Group under Section 10.2.1 and no claim
under Section 10.2.1 of this Agreement shall:
(i) be made unless notice thereof shall have been given by
or on behalf of Purchaser to Seller in the manner
provided in Section 10.4, unless failure to provide such
notice in a timely manner does not materially impair
Seller's ability to defend its rights, mitigate damages,
seek indemnification from a third party or otherwise
protect its interests;
(ii) be made to the extent that any loss may be recovered
under a policy of insurance in force on the date of loss
(other than a policy of insurance with an affiliate of
Purchaser); provided, however, that this Section
10.2.2(a)(ii) shall not apply to the extent that
coverage under the applicable policy of insurance is
denied by the applicable insurance carrier;
(iii) be made to the extent that such claim relates to a
liability arising out of or relating to any act,
omission, event or occurrence connected with:
(A) the use, ownership or operation of any of the
Hospitals, or
(B) the use, ownership or operation of any of the
Assets,
on and after the Effective Time (without regard to
whether such use, ownership or operation is consistent
with Seller's policies, procedures and/or practices
prior to the Effective Time); other than as specifically
included in the Excluded Liabilities;
(iv) be made to the extent that such claim (or the basis
therefor) is set forth in the Disclosure Schedule, any
Exhibit or Schedule to this Agreement (without giving
effect to any Disapproved Schedules), unless Seller's
indemnification of the Purchaser Group is based on a
provision hereof other than Section 10.2.1(a);
(v) be made if and to the extent that proper provision or
reserve was made for the matter giving rise to the claim
in Net Working Capital;
(vi) be made to the extent such claim relates to an
obligation or liability for which Purchaser has agreed
to indemnify Seller pursuant to Section 10.3;
56
(vii) be made to the extent such claim relates to Seller's
failure to comply with or the Assets' failure to be in
compliance with the Americans with Disabilities Act;
provided, however, this Section 10.2.2(a)(vii) shall not
apply to the extent that such claim arises as a result
of a claim brought by an individual (which shall
specifically exclude, without limitation, governmental
third parties) who alleges that he or she has suffered
damages prior to the Effective Time, including, without
limitation, damages arising from personal injury;
(viii) be made to the extent such claim seeks Damages which
are consequential in nature (as opposed to direct),
including, without limitation, loss of future revenue or
income or loss of business reputation or opportunity
(collectively, "Consequential Damages"); provided,
however, the limitation contained in this Section
10.2.2(a)(viii) shall not apply to the extent of any
payments which Purchaser or any member of the Purchaser
Group is required to make to a third party (other than
any third party which is a member of the Purchaser
Group) which are in the nature of Consequential Damages;
and
(ix) accrue to Purchaser or any member of the Purchaser Group
under Section 10.2.1(a) unless and only to the extent
that (A) the actual liability of Seller in respect of
any single claim under Section 10.2.1(a) exceeds Five
Thousand Dollars ($5,000) (a "Relevant Claim") and (B)
the total actual liability of Seller under Section
10.2.1(a) in respect of all Relevant Claims in the
aggregate exceeds One Million Dollars ($1,000,000) (the
"Aggregate Amount"), in which event Purchaser or any
member of the Purchaser Group shall be entitled to seek
indemnification under Section 10.2.1(a) for all Relevant
Claims only in an amount of Damages which exceed the
Aggregate Amount.
(b) Notwithstanding any provision to the contrary contained in this
Agreement, the maximum aggregate liability of Seller to the Purchaser Group
under this Agreement shall not exceed the Cash Purchase Price (as adjusted
pursuant to Section 1.4).
(c) If Purchaser or any member of the Purchaser Group is entitled to
recover any sum (whether by payment, discount, credit or otherwise) from any
third party (other than an insurance carrier or an affiliate of Purchaser) in
respect of any matter for which a claim of indemnity could be made against
Seller hereunder, Purchaser shall, at its option, either use its reasonable
endeavors to recover such sum from such third party and any sum recovered will
reduce the amount of the claim, or assign to Seller the right of Purchaser or
the applicable member of the Purchaser Group to pursue such third party. If
Seller pays to any member of the Purchaser Group an amount in respect of a
claim, and such member of the Purchaser Group subsequently recovers from a third
party (other than an insurance carrier or an affiliate of Purchaser) a sum which
is referable to that claim, Purchaser shall, and shall cause the applicable
57
member of the Purchaser Group to, forthwith repay to Seller so much of the
amount paid by Purchaser or the applicable member of the Purchaser Group as does
not exceed the sum recovered from the third party less all reasonable costs,
charges and expenses incurred by Purchaser or the applicable member of the
Purchaser Group in obtaining payment in respect of that claim and in recovering
that sum from the third party.
(d) Upon notice to Seller specifying in reasonable detail the basis
therefore, Purchaser shall, during the term of the Indemnity Escrow Agreement,
give notice of any claim for indemnity hereunder to Seller and the Escrow Agent
pursuant to the Indemnity Escrow Agreement. In accordance with, and subject to,
the terms of the Indemnity Escrow Agreement, Purchaser shall, during the term of
the Indemnity Escrow Agreement, unless and until all amounts in the escrow have
been exhausted, satisfy its indemnity claims under Section 10.2 from any amounts
held in escrow pursuant to the Indemnity Escrow Agreement. The Escrow Amount
shall not be deemed to be a limit on Seller's obligations under this Section
10.2.
10.3 Indemnification of Seller by Purchaser.
10.3.1 Indemnification. Purchaser shall keep and save Seller, its
affiliates and their respective directors, officers, employees, agents and other
representatives (the "Seller Group"), forever harmless from and shall indemnify
and defend the Seller Group against any and all Damages, to the extent connected
with or arising or resulting from (a) any breach of any representation or
warranty of Purchaser under this Agreement, (b) any breach or default by
Purchaser under any covenant or agreement of Purchaser under this Agreement, (c)
cost reports (and all claims with respect thereto) relating to Purchaser's
operation of the Hospitals with respect to Medicare, Medicaid, TRICARE or Blue
Cross programs or any other third-party payor for all periods beginning on and
after the Effective Time, (d) the Assumed Obligations, (e) any professional
liability claim arising out of the business operations of the Hospitals on and
after the Effective Time, (f) liabilities to the Hired Employees arising out of
actions of Purchaser based wholly or in part upon the contents of the personnel
records of such employees, (g) involuntary termination of the Hired Employees on
and after the Effective Time, which termination would constitute a "mass layoff"
or a "plant closing" within the meaning of WARN, (h) any act, conduct or
omission of Purchaser that has accrued, arisen, occurred or come into existence
with respect to the Hospitals or the Assets for time periods on and after the
Effective Date and (i) any securities litigation involving (i) Purchaser (but
only to the extent such litigation relates to the Hospitals) and/or (ii) any
financing obtained by Purchaser which is utilized to fund, in whole or in part,
the Cash Purchase Price, other than to the extent arising out of any willful
misconduct of Seller or its employees prior to the Effective Time, or
intentionally false or intentionally misleading statements of Seller or its
employees prior to the Effective Time. No provision in this Agreement shall
prevent Purchaser from pursuing any of its legal rights or remedies that may be
granted to Purchaser by law against any Person other than any other member of
the Seller Group.
10.3.2 Indemnification Limitations. (a) Notwithstanding any
provision to the contrary contained in this Agreement, Purchaser shall be under
no liability to indemnify the Seller Group under 10.3.1 and no claim under
Section 10.3.1 of this Agreement shall:
58
(i) be made unless notice thereof shall have been given by
or on behalf of Seller to Purchaser in the manner
provided in Section 10.4, unless failure to provide such
notice in a timely manner does not materially impair
Purchaser's ability to defend its rights, mitigate
damages, seek indemnification from a third party or
otherwise protect its interests;
(ii) be made to the extent that any loss may be recovered
under a policy of insurance in force on the date of loss
(other than a policy of insurance with an affiliate of
Seller); provided, however, that this Section
10.3.2(a)(ii) shall not apply to the extent that
coverage under the applicable policy of insurance is
denied by the applicable insurance carrier;
(iii) be made to the extent that such claim relates to a
liability of Seller arising out of or relating to any
act, omission, event or occurrence connected with:
(A) the use, ownership or operation of any of the
Hospitals, or
(B) the use, operation or ownership of any of the
Assets,
prior to the Effective Time, other than as specifically
included in the Assumed Obligations;
(iv) be made to the extent such claim relates to an
obligation or liability for which Seller has agreed to
indemnify Purchaser pursuant to Section 10.2;
(v) be made to the extent such claim seeks Consequential
Damages; provided, however, the limitation contained in
this Section 10.3.2.(a)(v) shall not apply to the extent
of any payments which Seller or any member of the Seller
Group is required to make to a third party (other than
any third party which is a member of the Seller Group)
which are in the nature of Consequential Damages; and
(vi) accrue to Seller or any member of the Seller Group under
Section 10.3.1(a) unless and only to the extent that (A)
the actual liability of Purchaser in respect of any
single claim under Section 10.3.1(a) exceeds Five
Thousand Dollars ($5,000) (a "Seller Relevant Claim")
and (B) the total actual liability of Purchaser under
Section 10.3.1(a) in respect of all Seller Relevant
Claims in the aggregate exceeds One Million Dollars
($1,000,000) (the "Seller Aggregate Amount"), in which
event Seller or any member of the Seller Group shall be
entitled to seek indemnification under Section 10.3.1(a)
for all Seller Relevant Claims only in an amount of
Damages which exceed the Seller Aggregate Amount.
59
(b) Notwithstanding any provision to the contrary contained in this
Agreement, the maximum aggregate liability of Purchaser to the Seller Group
under this Agreement, subsequent to Purchaser paying the Cash Purchase Price at
Closing (as adjusted pursuant to Section 1.4), shall not exceed an additional
amount equal to the Cash Purchase Price.
(c) If Seller or any member of the Seller Group is entitled to
recover any sum (whether by payment, discount, credit or otherwise) from any
third party (other than an insurance carrier or an affiliate of Seller) in
respect of any matter for which a claim of indemnity could be made against
Purchaser hereunder, Seller shall, at its option, either use its reasonable
endeavors to recover such sum from such third party and any sum recovered will
reduce the amount of the claim, or assign to Purchaser the right of Seller or
the applicable member of the Seller Group to pursue such third party. If
Purchaser pays to any member of the Seller Group an amount in respect of a
claim, and such member of the Seller Group subsequently recovers from a third
party (other than an insurance carrier or an affiliate of Seller) a sum which is
referable to that claim, Seller shall, and shall cause the applicable member of
the Seller Group to, forthwith repay to Purchaser so much of the amount paid by
Seller or the applicable member of the Seller Group as does not exceed the sum
recovered from the third party less all reasonable costs, charges and expenses
incurred by Seller or the applicable member of the Seller Group in obtaining
payment in respect of that claim and in recovering that sum from the third
party.
10.4 Method of Asserting Claims. All claims for indemnification by any
Person entitled to indemnification (the "Indemnified Party") under this Article
10 will be asserted and resolved as follows:
(a) In the event any claim or demand, for which a party hereto (an
"Indemnifying Party") would be liable for the Damages to an Indemnified Party,
is asserted against or sought to be collected from such Indemnified Party by a
Person other than Seller, Purchaser or their affiliates (a "Third Party Claim"),
the Indemnified Party shall deliver a notice of its claim (a "Claim Notice") to
the Indemnifying Party within thirty (30) calendar days after the Indemnified
Party receives written notice of such Third Party Claim; provided, however, that
notice shall be provided to the Indemnifying Party within fifteen (15) calendar
days after receipt of a complaint, petition or institution of other formal legal
action by the Indemnified Party. If the Indemnified Party fails to provide the
Claim Notice within such applicable time period after the Indemnified Party
receives written notice of such Third Party Claim and thereby materially impairs
the Indemnifying Party's ability to protect its interests, the Indemnifying
Party will not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim. The Indemnifying Party will notify the Indemnified Party
within thirty (30) calendar days after receipt of the Claim Notice (the "Notice
Period") whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against such Third Party
Claim.
(i) If the Indemnifying Party notifies the Indemnified Party
within the Notice Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this Section
10.4(a), then, subject to the immediately succeeding sentence, the Indemnifying
Party will have the right to defend, at its sole cost and expense, such Third
Party Claim by all appropriate proceedings, which proceedings will be prosecuted
by the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party. To the extent the Third Party Claim is
solely for money damages, the
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Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof. Notwithstanding the foregoing,
the Indemnified Party may, at its sole cost and expense, file during the Notice
Period any motion, answer or other pleadings that the Indemnified Party may deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and which is not prejudicial, in the reasonable judgment of the
Indemnifying Party, to the Indemnifying Party. Except as provided in Section
10.4(a)(ii) hereof, if an Indemnified Party takes any such action that is
prejudicial and causes a final adjudication that is adverse to the Indemnifying
Party, the Indemnifying Party will be relieved of its obligations hereunder with
respect to the portion of such Third Party Claim prejudiced by the Indemnified
Party's action. If requested by the Indemnifying Party, the Indemnified Party
agrees, at the sole cost and expense of the Indemnifying Party, to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, or, if appropriate and related to
the Third Party Claim in question, in making any counterclaim against the Person
asserting the Third Party Claim, or any cross-complaint against any Person
(other than the Indemnified Party or any of its affiliates). The Indemnified
Party may participate in, but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying Party pursuant to this Section
10.4(a)(i), and except as specifically provided in this Section 10.4(a)(i), the
Indemnified Party will bear its own costs and expenses with respect to such
participation.
(ii) If the Indemnifying Party fails to notify the Indemnified
Party within the Notice Period that the Indemnifying Party desires to defend the
Indemnified Party pursuant to this Section 10.4(a), or if the Indemnifying Party
gives such notice but fails to prosecute diligently or settle the Third Party
Claim, or if the Indemnifying Party fails to give any notice whatsoever within
the Notice Period, then the Indemnified Party will have the right to defend, at
the sole cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings will be promptly and reasonably
prosecuted by the Indemnified Party to a final conclusion or will be settled at
the discretion of the Indemnified Party. The Indemnified Party will have full
control of such defense and proceedings, including any compromise or settlement
thereof; provided, however, that if requested by the Indemnified Party, the
Indemnifying Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnified Party and its counsel in contesting any
Third Party Claim which the Indemnified Party is contesting, or, if appropriate
and related to the Third Party Claim in question, in making any counterclaim
against the Person asserting the Third Party Claim, or any cross-complaint
against any Person (other than the Indemnifying Party or any of its affiliates).
Notwithstanding the foregoing provisions of this Section 10.4(a)(ii), if the
Indemnifying Party has notified the Indemnified Party with reasonable promptness
that the Indemnifying Party disputes its liability to the Indemnified Party with
respect to such Third Party Claim and if such dispute is resolved in favor of
the Indemnifying Party, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
10.4(a)(ii) or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. Subject to the above
terms of this Section 10.4(a)(ii), the Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 10.4(a)(ii), and the Indemnifying Party will bear its
own costs and expenses with respect to such participation. The Indemnified Party
shall give sufficient prior
61
notice to the Indemnifying Party of the initiation of any discussions relating
to the settlement of a Third Party Claim to allow the Indemnifying Party to
participate therein.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that either (i) does not involve a Third Party
Claim being asserted against or sought to be collected from the Indemnified
Party or (ii) is a Seller Tax Claim, the Indemnified Party shall deliver an
Indemnity Notice (as hereinafter defined) to the Indemnifying Party. (The term
"Indemnity Notice" shall mean written notification of a claim for indemnity
under Article 10 hereof (which claim does not involve a Third Party Claim or is
a Seller Tax Claim) by an Indemnified Party to an Indemnifying Party pursuant to
this Section 10.4, specifying the nature of and specific basis for such claim
and the amount or the estimated amount of such claim.) The failure by any
Indemnified Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that an Indemnifying Party demonstrates
that it has been prejudiced thereby.
(c) If the Indemnifying Party does not notify the Indemnified Party
within thirty (30) calendar days following its receipt of a Claim Notice or an
Indemnity Notice that the Indemnifying Party disputes its liability to the
Indemnified Party hereunder, such claim specified by the Indemnified Party will
be conclusively deemed a liability of the Indemnifying Party hereunder and the
Indemnifying Party shall pay the amount of such liability to the Indemnified
Party on demand, or on such later date (i) in the case of a Third Party Claim,
as the Indemnified Party suffers the Damages in respect of such Third Party
Claim, (ii) in the case of an Indemnity Notice in which the amount of the claim
is estimated, when the amount of such claim becomes finally determined or (iii)
in the case of a Seller Tax Claim, within fifteen (15) calendar days following
final determination of the item giving rise to the claim for indemnity. If the
Indemnifying Party has timely disputed its liability with respect to such claim,
as provided above, the Indemnifying Party and the Indemnified Party agree to
proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations, such dispute will be resolved by adjudication by
a court or similar tribunal.
(d) The Indemnified Party agrees to give the Indemnifying Party
reasonable access to the books and records and employees of the Indemnified
Party in connection with the matters for which indemnification is sought
hereunder, to the extent the Indemnifying Party reasonably deems necessary in
connection with its rights and obligations hereunder.
(e) The Indemnified Party shall assist and cooperate with the
Indemnifying Party in the conduct of litigation, the making of settlements and
the enforcement of any right of contribution to which the Indemnified Party may
be entitled from any Person in connection with the subject matter of any
litigation subject to indemnification hereunder. In addition, the Indemnified
Party shall, upon request by the Indemnifying Party or counsel selected by the
Indemnifying Party (without payment of any fees or expenses to the Indemnified
Party or an employee thereof), attend hearings and trials, assist in the
securing and giving of evidence, assist in obtaining the presence or cooperation
of witnesses, and make available its own personnel; and shall do whatever else
is necessary and appropriate in connection with such litigation. The Indemnified
Party shall not make any demand upon the Indemnifying Party or counsel for the
Indemnifying Party in connection with any litigation subject to indemnification
hereunder, except a general demand for indemnification as provided hereunder. If
the Indemnified Party
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shall fail to perform such obligations as Indemnified Party hereunder or to
cooperate fully with the Indemnifying Party in Indemnifying Party's defense of
any suit or proceeding, such cooperation to include, without limitation,
attendance at all relevant depositions and the provision of all documents
(subject to appropriate privileges) relevant to the defense of any claim, then,
except where such failure does not materially impair the Indemnifying Party's
defense of such claims after notice to the Indemnified Party and ten (10) days
to cure, the Indemnifying Party shall be released from all of its obligations
under this Agreement with respect to that suit or proceeding and any other
claims which had been raised in such suit or proceeding.
(f) Following indemnification as provided for hereunder, the
Indemnifying Party shall be subrogated to all rights of the Indemnified Party
with respect to all Persons relating to the matter for which indemnification has
been made; provided, however, that the Indemnifying Party shall have no
subrogation rights to seek reimbursement through or from the Indemnified Party's
insurance policies, program, coverage, carriers or beneficiaries.
10.5 Exclusive. Other than claims for fraud or equitable relief (which
equitable relief claims are nevertheless subject to Section 10.1), any claim
arising under this Agreement or in connection with or as a result of the
transactions contemplated by this Agreement or any Damages or injury alleged to
be suffered by any party as a result of the actions or failure to act by any
other party shall, unless otherwise specifically stated in this Agreement, be
governed solely and exclusively by the provisions of this Article 10 and the
Indemnity Escrow Agreement. If Seller and Purchaser cannot resolve such claim by
mutual agreement, such claim shall be determined by adjudication by a court or
similar tribunal subject to the provisions of this Article 10.
ARTICLE 11
TAX AND COST REPORT MATTERS
11.1 Tax Matters; Allocation of Purchase Price.
(a) After the Closing Date, the parties shall cooperate fully with
each other and shall make available to each other, as reasonably requested, all
information, records or documents relating to tax liabilities or potential tax
liabilities attributable to Seller with respect to the operation of the
Hospitals for all periods prior to the Effective Time and shall preserve all
such information, records and documents at least until the expiration of any
applicable statute of limitations or extensions thereof. The parties shall also
make available to each other as reasonably required, and at the reasonable cost
of the requesting party (for out-of-pocket costs and expenses only), personnel
responsible for preparing or maintaining information, records and documents in
connection with tax matters.
(b) The Purchase Price shall be allocated among each of the
Hospitals in accordance with Schedule 11.1(b). Seller and Purchaser acknowledge
and agree that the portion of the Purchase Price which is allocated on Schedule
11.1(b) to Saint Xxxxxxx Hospital is the value of the property, plant and
equipment of SVH only and does not reflect any value attributable to the working
capital of SVH, and that the value of the property, plant and
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equipment of SVH and all net working capital of SVH (commonly referred to as the
"enterprise value") would be Seventy One Million Six Hundred Eighty Thousand
Dollars ($71,680,000). Seller and Purchaser hereby agree to allocate the
Purchase Price in accordance with Schedule 11.1(b), to be bound by such
allocations, to account for and report the purchase and sale of the Hospitals
contemplated hereby for federal and state tax purposes in accordance with such
allocations, and not to take any position (whether in tax returns, tax audits,
or other tax proceedings), which is inconsistent with such allocations without
the prior written consent of the other parties. Within one hundred twenty (120)
calendar days following the Closing Date, Purchaser shall provide Seller a
proposed detailed allocation of the Purchase Price among each category of Assets
for each of the Hospitals. Such allocation shall be in accordance with Section
1060 of the Internal Revenue Code and the Treasury Regulations promulgated
thereunder. Purchaser's proposed allocation shall become final and binding on
the parties thirty (30) calendar days after Purchaser provides the proposal to
Seller, unless Seller objects in writing (in which case, Seller shall propose an
allocation). If the parties cannot agree on the allocation, the parties shall
use commercially reasonable efforts to resolve any disputes, but if a final
resolution is not reached within thirty (30) calendar days after Seller has
submitted its objection in writing, each of Purchaser and Seller shall make
their own independent allocation of the total consideration among each category
of the Assets. To the extent Seller and Purchaser reach agreement upon the
allocation (or Seller does not otherwise object in writing to Purchaser's
proposed allocation as described above), Seller and Purchaser hereby agree to be
bound by such allocation, to account for and report the purchase and sale of the
Assets contemplated hereby for federal and state tax purposes in accordance with
such allocation, and not to take any position (whether in tax returns, tax
audits, or other tax proceedings), which is inconsistent with such allocation
without the prior written consent of the other parties.
11.2 Cost Report Matters.
(a) Seller shall prepare and timely file all cost reports relating
to the periods ending prior to the Effective Time or required as a result of the
consummation of the transactions described in this Agreement, including, without
limitation, those relating to Medicare, Medicaid, Blue Cross and other third
party payors which settle on a cost report basis (the "Seller Cost Reports").
Purchaser shall forward to Seller any and all correspondence relating to the
Accounts Receivable, the Seller Cost Reports or rights to settlements and
retroactive adjustments on the Seller Cost Reports ("Agency Settlements") within
fifteen (15) business days after receipt by Purchaser. Purchaser shall not reply
to any such correspondence without Seller's written approval. Purchaser shall
remit any receipts relating to the Accounts Receivable, the Seller Cost Reports
or the Agency Settlements within fifteen (15) business days after receipt by
Purchaser (except those receipts to be retained by Purchaser pursuant to Section
11.3) and will forward any demand for payments within fifteen (15) business
days. Purchaser (and its respective successors-in-interest, assigns and
affiliates) shall have neither the right to offset amounts payable to Seller
under this Section 11.2 against, nor the right to contest its obligation to
transfer, assign and convey to Seller because of, outstanding claims,
liabilities or obligations asserted by Purchaser against Seller including but
not limited to pursuant to the post-closing Cash Purchase Price adjustment of
Section 1.4 and the indemnification provisions of Section 10.2. Seller shall
retain all rights to the Seller Cost Reports and to the Accounts Receivable
including, without limitation, any payables resulting therefrom or receivables
relating thereto and the right to appeal any Medicare determinations relating to
the Agency Settlements and the Seller Cost Reports. Seller
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will furnish copies of the business records relating to Accounts Receivable to
Purchaser upon request and allow Purchaser and its representatives reasonable
access to such documents.
(b) Upon reasonable notice and during normal business office hours,
Purchaser will cooperate with Seller, at Seller's expense (but only with respect
to out-of-pocket costs), in regard to the preparation, filing, handling, and
appeals of the Seller Cost Reports. Upon reasonable notice and during normal
business office hours, Purchaser will cooperate with Seller, at Seller's expense
(but only with respect to out-of-pocket costs), in connection with any cost
report disputes and/or other claim adjudication matters relative to governmental
program reimbursement. Such cooperation shall include obtaining files at the
Hospitals and Purchaser's provision to Seller of data and statistics, including,
without limitation, the items set forth on Schedule 11.2(b), and the
coordination with Seller pursuant to reasonable notice of Medicare and Medicaid
exit conferences or meetings. Purchaser shall provide to Seller such data,
statistics and items requested by Seller no later than twenty (20) days after
the date upon which Purchaser has received such request.
(c) The parties acknowledge that disproportionate share payments are
determined by Medicaid for a particular fiscal year based on Hospital data taken
from a previous fiscal year. If a party receives after Closing one or more
Medicaid disproportionate share payments in respect of a Medicaid fiscal year
that straddles the Effective Time, then, regardless of the particular Medicaid
fiscal year from which the data used to determine the payment was taken, the
payment shall be apportioned between Seller and Purchaser based on the number of
months prior to the Effective Time (in the case of Seller) and after the
Effective Time (in the case of Purchaser) Seller and Purchaser each owned the
Hospital.
(d) To the extent that Medicare, Medicaid, Blue Cross and other
third party payors offset any amounts owing to Purchaser for periods from and
after the Effective Time, or require Purchaser to pay any amounts to such third
parties for periods from and after the Effective Time, in each case, as a result
of any amounts owing (or allegedly owing) to such third parties by Seller in
respect of periods prior to the Effective Time (the "Offset Amounts"), Purchaser
shall promptly notify Seller of the same and, within fifteen (15) business days
of receipt of such notice, Seller shall reimburse Purchaser the amount that has
been offset or the amount that Purchaser is required to pay, as applicable.
Without limiting Seller's obligations contained in this Section 11.2(d), (i)
Seller shall have the right to dispute with the applicable payor any such
offsets or amounts alleged to be owed to such payor, (ii) Seller and Purchaser
shall reasonably cooperate with each other in connection with Seller's pursuit
of such dispute and (iii) if Purchaser subsequently receives any refund from the
applicable payor of any amount which Seller has paid to Purchaser pursuant to
this Section 11.2(d), Purchaser shall, within fifteen (15) business days after
receipt thereof, pay such amount to Seller. Neither Seller nor Purchaser (and
its respective successors-in-interest, assigns and affiliates), as the case may
be, shall have the right to offset amounts payable to the other under this
Section 11.2(d) against, nor the right to contest its obligation to transfer,
assign and convey to the other because of, outstanding claims, liabilities or
obligations asserted by that party against the other party, including but not
limited to, pursuant to the indemnification provisions of Article 10.
11.3 Transition Patients. To compensate each of Seller and Purchaser for
inpatient hospital services rendered and medicine, drugs, and supplies provided
at the Hospitals (the
65
"Transition Services") with respect to patients who are admitted to the
Hospitals prior to the Effective Time but who are not discharged until on or
after the Effective Time ("Transition Patients"), the parties shall take the
following actions:
(a) It is the intent of the parties that Medicare and Medicaid not
pay more for Transition Services provided by Seller and Purchaser to Transition
Patients whose medical care is paid for, in whole or in part, by Medicare or
Medicaid on a fee-for-service basis ("Government Program Transition Patients")
than Medicare or Medicaid, as applicable, would otherwise have paid to Seller
with respect to the DRG payment for such patients if the transactions
contemplated in this Agreement had not occurred. Therefore, Purchaser shall
provide Transition Services to each Government Program Transition Patient on
behalf of Seller from the Effective Time until the earlier of: (i) the discharge
of the patient; or (ii) 11:59 p.m. on the date which is thirty (30) days after
the Closing Date. In the event that any Government Program Transition Patient is
still admitted at any of the Hospitals at 12:00 a.m. on the date which is
thirty-one (31) days after the Closing Date, the parties shall document the
transfer of such patient from Seller to Purchaser in accordance with applicable
Medicare or Medicaid procedures. Seller shall xxxx Medicare or Medicaid, as
applicable, in its name and in accordance with applicable Medicare or Medicaid
procedures for Transition Services furnished to each Government Program
Transition Patient prior to the earlier of (i) the discharge of the patient or
(ii) 11:59 p.m. on the date which is thirty (30) days after the Closing Date.
Purchaser shall not xxxx for any Transition Services provided to Government
Program Transition Patients after the Effective Time; provided, however, that if
a Government Program Transition Patient is transferred to Purchaser pursuant to
this Section 11.3(a), Purchaser shall xxxx Medicare or Medicaid, as applicable,
in its name and in accordance with applicable Medicare or Medicaid procedures
only for services provided to such patient following such transfer. Purchaser
shall provide to Seller copies of all medical records and other information
reasonably required in order for Seller to xxxx Medicare and Medicaid for
Transition Services and shall cooperate with Seller to facilitate such billing
activities. Without limiting the foregoing, Seller and Purchaser shall achieve
consensus regarding the coding of all Transition Services to be billed by Seller
pursuant to this Section 11.3(a).
(b) The aggregate reimbursement received by Seller with respect to
Transition Services provided to each Government Program Transition Patient shall
be apportioned between Seller and Purchaser based upon the ratio of the total
charges for the Transition Services provided to such Government Program
Transition Patient by Seller, or Purchaser, as the case may be, to the sum of
the total charges for the Transition Services provided to such Government
Program Transition Patient by Seller and Purchaser. All such payments shall be
reconciled within thirty (30) days following receipt by Seller of reimbursement
with respect to Transition Services provided to the applicable Government
Program Transition Patient. In the event that (i) Seller receives additional
amounts following a successful Medicare or Medicaid appeal (which appeal will or
will not be undertaken in the discretion of the party who is entitled to the
greater share of the claimed reimbursement under the apportionment methodology
described above, with the cost of such appeal apportioned between the parties in
a like manner) or (ii) Medicare or Medicaid reopens and adjusts such
reimbursement determination, the parties shall re-apportion the aggregate
reimbursement received by Seller in the manner described in this Section
11.3(b).
(c) The parties shall document the transfer of all other Transition
Patients ("Transferred Transition Patients") from Seller to Purchaser as of the
Effective Time. Seller and
66
Purchaser shall each xxxx the applicable payor in accordance with applicable
payor procedures for Transition Services provided by such party to each
Transferred Transition Patient. In the event that either Seller or Purchaser is
denied reimbursement in whole or in part as a result of any such transfer
(including transfers of Government Program Transition Patients pursuant to
Section 11.3(a)), the parties shall apportion the aggregate reimbursement
received by both Seller and Purchaser with respect to Transition Services
provided to such patient in the manner described in Section 11.3(b).
(d) In the event that Seller and Purchaser are unable to agree on
the amounts to be paid by one party to the other, or whether any payment is due
under this Section 11.3, then such amounts shall be determined by the
Independent Auditor at their joint expense.
(e) Neither party (nor their respective successors-in-interest,
assigns and affiliates) shall have the right to offset amounts payable under
this Section 11.3 against, or to contest its obligation to make any payment
pursuant to this Section 11.3 to the other party because of, outstanding claims,
liabilities or obligations asserted by such party against the other party
including but not limited to pursuant to the post-closing Cash Purchase Price
adjustment of Section 1.4 and the indemnification provisions of Article 10.
(f) If the Hospitals' fiscal intermediary requires or requests that
Seller and Purchaser use a billing method for services rendered to Transition
Patients that differs from the method described in this Section 11.3, Seller and
Purchaser shall comply with the fiscal intermediary's requirement or request and
shall equitably adjust the aggregate reimbursement received by Seller and
Purchaser for such services to ensure that each party receives the same
proportion of the aggregate reimbursement as such party would have received had
the parties followed the method described above in this Section 11.3.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Further Assurances and Cooperation. Seller shall execute, acknowledge
and deliver to Purchaser any and all other assignments, consents, approvals,
conveyances, assurances, documents and instruments reasonably requested by
Purchaser at any time and shall take any and all other actions reasonably
requested by Purchaser at any time for the purpose of more effectively
assigning, transferring, granting, conveying and confirming to Purchaser, the
Assets. After consummation of the transaction contemplated in this Agreement,
the parties agree to cooperate with each other and take such further actions as
may be necessary or appropriate to effectuate, carry out and comply with all of
the terms of this Agreement, the documents referred to in this Agreement and the
transactions contemplated hereby.
12.2 Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
provided, however, that no party hereto may assign any of its rights or delegate
any of its duties under this Agreement without the prior written consent of the
other parties, except that Purchaser may assign any of its rights or delegate
any of its duties under this Agreement to any one or more wholly-owned
subsidiaries of Purchaser or of
67
Vanguard upon Seller's receipt of Purchaser's guaranty of such wholly-owned
subsidiary's obligations, in a form reasonably acceptable to Seller. If
Purchaser consents to any assignment of any of Seller's rights under this
Agreement, such Seller shall remain bound by all of the obligations hereunder,
including those set forth under Article 10 hereof.
12.3 Governing Law; Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts as applied to contracts made and performed within the Commonwealth
of Massachusetts. The parties hereby waive their right to assert in any
proceeding involving this Agreement that the law of any jurisdiction other than
the Commonwealth of Massachusetts shall apply to such dispute; and the parties
hereby covenant that they shall assert no such claim in any dispute arising
under this Agreement. Any proceeding which arises out of or relates in any way
to the subject matter of this Agreement shall be brought in the Superior Court
of the Commonwealth of Massachusetts, Suffolk County or the United States
District Court for the District of Massachusetts. The parties hereby consent to
the jurisdiction of the Commonwealth of Massachusetts and waive their right to
challenge any proceeding involving or relating to this Agreement on the basis of
lack of jurisdiction over the Person or forum non conveniens.
12.4 Amendments. This Agreement may not be amended other than by written
instrument signed by the parties hereto.
12.5 Exhibits, Schedules and Disclosure Schedule. The Disclosure Schedule
and all exhibits and schedules referred to in this Agreement shall be attached
hereto and are incorporated by reference herein. Notwithstanding the foregoing,
Exhibit 1.6.8, the Information Technology Transition Services Agreement which is
one of the Transitional Services Agreements included among Exhibit 1.6.10, and
Exhibit 12.18 are the only exhibits which are attached hereto as of the
Effective Date, and the parties have agreed, and hereby do agree, to diligently
negotiate in good faith all of the other exhibits referred to in this Agreement
which are not attached hereto as of the Effective Date; it being understood that
it is the intention of the parties to finalize such other exhibits on mutually
agreeable terms no later than thirty (30) days after the Effective Date and,
upon reaching such agreement, such other exhibits shall be attached to this
Agreement and incorporated herein by reference. Any matter disclosed in this
Agreement or in the Disclosure Schedule with reference to any Section of this
Agreement shall be deemed a disclosure in respect of all sections to which such
disclosure may apply. To the extent Seller provides Purchaser a supplement or
update to the Disclosure Schedule or the other schedules to this Agreement after
the Effective Date, Purchaser shall be deemed to have approved the content of
any such supplement or update unless, within five (5) business days after
receipt thereof, Purchaser provides Seller with written notice that the
applicable supplement or update is unacceptable to Purchaser, which
unacceptability shall be determined in Purchaser's reasonable discretion (such
disapproved schedules are referred to herein as the "Disapproved Schedules").
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12.6 Notices. Any notice, demand or communication required, permitted, or
desired to be given hereunder shall be deemed effectively given when personally
delivered, when received by telegraphic or other electronic means (including
facsimile) or overnight courier, or five (5) calendar days after being deposited
in the United States mail, with postage prepaid thereon, certified or registered
mail, return receipt requested, addressed as follows:
If to Seller: c/x Xxxxx HealthSystem Medical, Inc.
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X'Xxxxx
Facsimile No.: (000) 000-0000
With a copy to: c/x Xxxxx HealthSystem Medical, Inc.
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxx XxXxxxxx, Esq.
Facsimile No.: (000) 000-0000
With a copy to: XxXxxxxxx Will & Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Purchaser: VHS Acquisition Subsidiary Number 7, Inc.
00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
or at such other address as one party may designate by notice hereunder to the
other parties.
12.7 Headings. The section and other headings contained in this Agreement
and in the Disclosure Schedule, exhibits and schedules to this Agreement are
included for the purpose of convenient reference only and shall not restrict,
amplify, modify or otherwise affect in any way the meaning or interpretation of
this Agreement or the Disclosure Schedule, exhibits and schedules hereto.
12.8 Confidentiality and Publicity. The parties hereto shall hold in
confidence the information contained in this Agreement, and all information
related to this Agreement, which is not otherwise known to the public, shall be
held by each party hereto as confidential and proprietary information and shall
not be disclosed without the prior written consent of the other parties;
provided, however, Seller shall be permitted to provide a copy of this Agreement
to any applicable governmental or administrative authorities in connection with
Seller's pursuit of any appeal of any real and personal property tax assessments
on the Assets for periods prior to the
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Effective Time. Accordingly, Purchaser and Seller shall not discuss with, or
provide nonpublic information to, any third party (except for such party's
attorneys, accountants, directors, officers and employees, the directors,
officers and employees of any affiliate of any party hereto, and other
consultants and professional advisors) concerning this transaction prior to the
Effective Time, except: (a) as required in governmental filings or judicial,
administrative or arbitration proceedings, including without limitation the
filings to be made by the parties with respect to the HSR Act; or (b) pursuant
to public announcements made with the prior written approval of Seller and
Purchaser. The rights of Seller under this Section 12.8 shall be in addition and
not in substitution for the rights of Seller and Seller's affiliates under the
Confidentiality Agreement, which shall survive Closing.
12.9 Fair Meaning. This Agreement shall be construed according to its fair
meaning and as if prepared by all parties hereto.
12.10 Gender and Number; Construction. In this Agreement, unless the
context otherwise requires: (a) the words "herein", "hereof" and "hereunder",
and words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement; (b) references to "Articles" and
"Sections" are to the Articles and Sections into which this Agreement is
organized; (c) references to "Exhibits" and "Schedules" are to the Exhibits and
Schedules attached hereto; (d) references to a "party" means a party to this
Agreement and includes references to such party's successors and permitted
assigns; (e) references to a "third party" means a Person not a party to this
Agreement; (f) all references to the neuter gender shall include the feminine or
masculine gender and vice versa, where applicable, and all references to the
singular shall include the plural and vice versa, where applicable; and (g)
unless otherwise expressly provided, the word "including" followed by a listing
does not limit the preceding words or terms and shall mean "including, without
limitation."
12.11 Third Party Beneficiary. None of the provisions contained in this
Agreement are intended by the parties, nor shall they be deemed, to confer any
benefit on any Person not a party to this Agreement.
12.12 Expenses and Attorneys' Fees. Except as otherwise provided in this
Agreement, each party shall bear and pay its own costs and expenses relating to
the preparation of this Agreement and to the transactions contemplated by, or
the performance of or compliance with any condition or covenant set forth in,
this Agreement, including without limitation, the disbursements and fees of
their respective attorneys, accountants, advisors, agents and other
representatives, incidental to the preparation and carrying out of this
Agreement, whether or not the transactions contemplated hereby are consummated.
The parties expressly agree that the following shall be borne one-half by Seller
and one-half by Purchaser: (a) all costs of the Title Commitment and the Title
Policy (including the cost of any endorsements thereto); (b) all costs of the
Surveys; (c) all costs of the Environmental Survey; and (d) all documentary
transfer taxes and recording charges in connection with the conveyance of the
Assets to Purchaser. Purchaser shall bear all costs and expenses related to the
preparation and delivery of the audited financial statements of Seller with
respect to the operations of the Hospitals as of December 31, 2003 and December
31, 2002, and for the 12 months ended December 31, 2003, December 31, 2002, and
December 31, 2001 (collectively, the "Audited Statements"), which Audited
Statements Seller provided to Purchaser prior to the Effective Date. The parties
acknowledge and agree that the
70
costs and expenses described in the immediately preceding sentence with respect
to the Audited Statements equal Three Hundred Seventy Eight Thousand One Hundred
Dollars ($378,100). If any action is brought by any party to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
its court costs and reasonable attorneys' fees. If this Agreement is terminated
pursuant to Section 8.1(h), Seller shall reimburse Purchaser the reasonable
out-of-pocket expenses (excluding any overhead or similar expenses of Purchaser)
incurred by Purchaser in connection with the execution of this Agreement and the
activities of Purchaser prior to the termination hereof which activities are
reasonably related to the transactions contemplated by this Agreement.
12.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement, binding on all of the
parties hereto. The parties agree that facsimile copies of signatures shall be
deemed originals for all purposes hereof and that a party may produce such
copies, without the need to produce original signatures, to prove the existence
of this Agreement in any proceeding brought hereunder.
12.14 Entire Agreement. This Agreement, the Disclosure Schedule, the
exhibits and schedules, and the documents referred to in this Agreement contain
the entire understanding between the parties with respect to the transactions
contemplated hereby and supersede all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, between the
parties on the subject matter hereof (the "Superseded Agreements"), which
Superseded Agreements shall be of no further force or effect.
12.15 No Waiver. Any term, covenant or condition of this Agreement may be
waived at any time by the party which is entitled to the benefit thereof but
only by a written notice signed by the party expressly waiving such term or
condition. The subsequent acceptance of performance hereunder by a party shall
not be deemed to be a waiver of any preceding breach by any other party of any
term, covenant or condition of this Agreement, other than the failure of such
other party to perform the particular duties so accepted, regardless of the
accepting party's knowledge of such preceding breach at the time of acceptance
of such performance. The waiver of any term, covenant or condition shall not be
construed as a waiver of any other term, covenant or condition of this
Agreement.
12.16 Severability. If any term, provision, condition or covenant of this
Agreement or the application thereof to any party or circumstance shall be held
to be invalid or unenforceable to any extent in any jurisdiction, then the
remainder of this Agreement and the application of such term, provision,
condition or covenant in any other jurisdiction or to Persons or circumstances
other than those as to whom or which it is held to be invalid or unenforceable,
shall not be affected thereby, and each term, provision, condition and covenant
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
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12.17 Late Payments. If Purchaser or Seller, as the case may be, shall
fail to make any payment to the other on the date due, then the party failing to
receive such amount to which it is entitled shall have the right to receive
interest on the unpaid amount at a per annum rate equal to the prime rate
reported by the Wall Street Journal under "Money Rates" on the applicable due
date plus two percent (2%) (or the maximum rate allowed by law, whichever is
less) from such defaulting party, such interest accruing beginning on the
calendar day after the applicable due date until payment of such amount and all
interest thereon is made.
12.18 Vanguard Guaranty. Concurrent with the execution of this Agreement,
Purchaser shall cause Vanguard to execute and deliver to Seller (a) that certain
Guaranty Agreement in the form of Exhibit 12.18 attached hereto (the "Vanguard
Guaranty") and (b) a certificate of the Secretary of Vanguard certifying to
Seller (i) the incumbency of the officers of Vanguard on the Effective Date and
bearing the authentic signatures of all such officers who shall execute the
Vanguard Guaranty and (ii) that all necessary corporate action has been taken by
Vanguard in order to authorize the execution, delivery and performance of the
Vanguard Guaranty.
12.19 Time is of the Essence. Time is of the essence for all dates and
time periods set forth in this Agreement and each performance called for in this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been entered into as of the day and
year first above written.
PURCHASER:
VHS Acquisition Subsidiary Number 7, Inc., a
Delaware corporation
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Name: Xxxxx X. Xxxxx
Its: Executive Vice President
SELLER:
Xxxxx MetroWest Healthcare System,
Limited Partnership, a Massachusetts
limited partnership
By: Xxxxx HealthSystem MW, Inc., its
general partner
By: /s/ Xxxx X'Xxxxx
---------------------------------
Name: Xxxx X'Xxxxx
Its: Authorized Signatory
Saint Xxxxxxx Hospital, L.L.C., a
Massachusetts limited liability company
By: Saint Xxxxxxx Hospital, Inc.,
its managing member
By: /s/ Xxxx X'Xxxxx
---------------------------------
Name: Xxxx X'Xxxxx
Its: Authorized Signatory
OHM Services, Inc., a Massachusetts nonprofit
corporation
By: /s/ Xxxx X'Xxxxx
---------------------------------
Name: Xxxx X'Xxxxx
Its: Authorized Signatory
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ASSET SALE AGREEMENT
among
Xxxxx MetroWest Healthcare System, Limited Partnership,
a Massachusetts limited partnership
Saint Xxxxxxx Hospital, L.L.C.,
a Massachusetts limited liability company
OHM Services, Inc.,
a Massachusetts nonprofit corporation
and
VHS Acquisition Subsidiary Number 7, Inc.,
a Delaware corporation
DATED: October 11, 2004
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
Those schedules provided in the Disclosure Schedule; and
A-1 Acute Care Hospitals
A-2 MOBs
A-3 Other Businesses
1.2-a Usage Percentage
1.2-b Interim Balance Sheets
1.9(a) Owned Real Property
1.9(b) Leased Real Property
1.9(c) Personal Property
1.9(d) Licenses
1.9(e) Leases
1.9(f) Contracts
1.9(g) Prepaids
1.9(m) Names of Hospitals
1.10(d) Excluded Proprietary Assets
1.10(v) Privileged and Protected Items
1.10(x) Excluded Prepaids
1.10(aa) Excluded Website Content
1.10(bb) Other Excluded Assets
1.11(c) Capital Leases
SCHEDULE DESCRIPTION
1.11(i) Other Assumed Obligations
1.12(q) Other Excluded Liabilities
2.3(b) Government and Regulatory Consents
2.4(c) Material Contracts and Material Leases
2.4(d) Excluded Multi-Facility Contracts
2.5 Consents
2.6(a) Compliance with Law
2.6(b) Compliance with Environmental Laws
2.6(d) Status of Material Contracts and Material Leases
2.7(a) Title to Property
2.7(b) Real Property Encumbrances
2.8(a) Material Licenses
2.8(b) JCAHO Accreditation Periods
2.8(c) Threatened Medicare or Medicaid Investigations
2.8(d) Audit Periods
2.10 Financial Statements
2.11 Legal Proceedings
2.12(a) Seller Plans
2.12(d) Seller Plan Audits
2.13(a) Personnel List
2.13(b) Collective Bargaining Agreements
SCHEDULE DESCRIPTION
2.13(c) Terminated Employees
2.14 Insurance
3.5 Brokers - Purchaser
3.7 Legal Proceedings - Purchaser
4.8 Ground Leases
4.15 Parties to Receive Estoppel Letters
5.14 Community Benefit Obligations
7.7 Permitted Exceptions
10.2.1 Certain Governmental Investigations
11.1(b) Allocation of Purchase Price
11.2(b) Cost Report Data
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
1.6.1 Bills of Sale
1.6.2 Real Estate Assignments
1.6.3 Limited Warranty Deeds
1.6.8 THC Guaranty
1.6.10 Transitional Services Agreements
- Information Technology Transition Services Agreement
- Item Master Maintenance and Service Agreement
- QRS License Agreement
- License Agreement for Policy and Procedure Manuals
1.6.11 Business Services Agreement
1.6.13 Powers of Attorney
1.6.14 Group Purchasing Contract
1.6.15 Indemnity Escrow Agreement
4.12 Environmental Survey
6.4 Opinion of Purchaser's Counsel
7.6 Opinion of Seller's In-House Counsel
12.18 Vanguard Guaranty
